Great Northern Ski Company recently expanded its manufacturing capacity. The firm will now be able to produce up to 25,000 pairs of cross-country skis of either the mountaineering model or the touring model. The sales department assures management that it can sell between 19,000 and 23,000 units of either product this year. Because the models are very similar, the company will produce only one of the two models.

The following information was compiled by the accounting department.

	Model
	Touring			Mountaineering
Selling price per unit	$	142.00		$	130.00
Variable costs per unit		84.20			84.20

Fixed costs will total $594,400 if the touring model is produced but will be only $505,200 if the mountaineering model is produced. Great Northern Ski Company is subject to a 45 percent income tax rate.

Required:

1.

Compute the contribution-margin ratio for the mountaineering model. (Round your answer to 2 decimal places (e.g., .48).)

2.

If Great Northern Ski Company desires an after-tax net income of $38,120, how many pairs of mountaineering skis will the company have to sell? (Do not round intermediate calculations and round your final answer up to nearest whole number.)

3.

How much would the variable cost per unit of the mountaineering model have to change before it had the same break-even point in units as the touring model? (Round the touring model break-even point up to the nearest whole unit and round final answer to 2 decimal places.)

4.

Suppose the variable cost per unit of mountaineering skis decreases by 20 percent, and the total fixed cost of mountaineering skis increases by 20 percent. Compute the new break-even point. (Do not round intermediate calculations and round your final answer up to nearest whole number.)

5.	Suppose management decided to produce both products. If the two models are sold in equal proportions, and total fixed costs amount to $534,800, what is the firms break-even point in units? (Do not round intermediate calculations and round your final answer up to nearest whole number.)