Haslam Corporation produces and sells watches. It projects the following information for next year.

Sales price per unit $ 90

Variable production cost per unit 65

Fixed production costs (total) 400,000

Variable selling costs per unit 5

Fixed selling costs (total) 200,000

Required:

1. Determine the breakeven point in dollars.
2. What will Haslams pretax profit be at 25,000; and at 40,000 units?
3. Haslam is subject to a tax rate of 25 percent. If the CEO wants an after-tax profit of $200,000, how many units must it sell?
4. Haslam is considering an alternative strategy to reduce fixed production costs by $75,000; however, this would cause variable production costs to increase to $70 per unit. What is the new breakeven point in units? Should Haslam adopt the new strategy?