1. Gideon currently has a fixed annual cost of $800,000, variable cost of $20 per unit, and a selling price of $50 per unit. What is Gideons current breakeven point?

2. Continuing from the prior problem, Gideon is studying the possibility of expanding with a new factory because demand for their product is more than they can service in the old factory. If they proceed with this plan their annual fixed costs will increase to $1,500,000. Their variable cost per unit and selling price per unit will stay the same. What is Gideons new breakeven point with the new factory?

3. Instead of expanding into the new plant, what are some other alternatives Gideon could use to meet this increased demand. Mention at least one alternative and talk about a strength of this alternative and a weakness of this alternative.

4. Dexter Corporation projects the following units and selling prices:

Year 1 Year 2 Year 3 Year 4

Unit sales 1,000 1,500 2,000 3,000

Selling price per unit $10 $12 $15 $18

Please calculate Dexters projected or proforma sales.

5. Continuing from the prior problem, Dexter has the following fixed cost per year and variable cost per unit each year:

Year 1 Year 2 Year 3 Year 4

Annual fixed costs $2,000 $2,100 $2,200 $2,400

Variable costs per unit $5 $6 $8 $9

Assuming these are all the costs for Dexter. Please calculate Dexters projected or proforma profit.