IV. E Co manufactures a single product. Assume the following data for the year just completed: Fixed costs in total

Selling & Administrative. $ 60,000

Production 82,500

Variable cost per unit.

Selling & Administrative $5

Production. $8

There were no units in inventory at the beginning of the year. During the year 30,000 units were produced and 25,000 units were sold. Each unit sells for $35.

Required: ( 25 pts.)

1. What is the unit product cost using Absorption costing

2. What is the unit product cost using Variable costing?

3 . What is the companys operating income using variable costing?

4. What is the companys operating income using absorption costing?

5. Reconcile absorption and variable costing net operating incomes and explain why the two amounts differ.

6. Compute the breakeven point in dollar sales

7. Compute the breakeven point in unit sales

8. If the targeted net profit is $ 500,000, how many units must the company sell?

9. Compute the companys margin of Safety

10. Compute the degree of operating leverage (DOL) using total sales of 875,000

11. Use the DOL you computed in Question 10 to answer this question. If sales would increase by 10%, net operating income would increase by how much?