Jupiter Game Company manufactures pocket electronic games. Last year Jupiter sold 25,000 games at $25 each. Total costs amounted to $525,000, of which $150,000 were considered fixed.

In an attempt to improve its product, the company is considering replacing a component part that has a cost of $2.50 with a new and better part costing $4.50 per unit in the coming year. A new machine also would be needed to increase plant capacity. The machine would cost $18,000 with a useful life of six years and no salvage value. The company uses straight-line depreciation on all plant assets. (Ignore income taxes.)

Requlred: 1. What was Jupiter's break-even point in number of units last year? 2. How many units of product would the company have had to sell in the last year to earn $140,000 ? Number of sales required units 3. If management holds the sales price constant and makes the suggested changes, how many units of product must be sold in the coming year to break even? If the firm holds the sales price constant and makes the suggested changes, how many units of product will the company have to ell to make the same net income as last year? If Jupiter wishes to maintain the same contribution-margin ratio, what selling price per unit of product must it charge next year to cover the increased direct-material cost? Note: Round your Intermedlate calculatlons and final answer to 2 declmal ploces. Cincinnati Tool Company (CTC) manufactures a line of electric garden tools that are sold in general hardware stores. The company's controller. Will Fulton, has just received the sales forecast for the coming year for CTC's three products: hedge clippers, weeders, and leaf blowers. CTC has experienced considerable variations in sales volumes and variable costs over the past two years, and Fulton believes the forecast should be carefully evaluated from a cost-volume-profit viewpoint. The preliminary budget information for 202 follows: For 202, CTC's fixed manufacturing overhead is budgeted at $2,000,000, and the company's fixed selling and administrative expenses are forecasted to be $600,000. CTC has a tax rate of 40 percent. PR 7-49 (StatlC) Part 1: Determine CTC's budgeted net Income for 202. Requlred: 1. Determine CTC's budgeted net income for 202. 2. Assuming the sales mix remains as budgeted, determine how many units of each product CTC must sell in order to break even in 202. Note: Do not round Intermedlate colculatlons. 3. After preparing the original estimates, management determined that its variable manufacturing cost of leaf blowers would increase by 20 percent, and the variable selling cost of hedge clippers could be expected to increase by $1.00 per unit. However, management nas decided not to change the selling price of either product. In addition, management has learned that its leaf blower has been perceived as the best value on the market, and it can expect to sell three times as many leaf blowers as each of its other products. Under these circumstances, determine how many units of each product CTC would have to sell in order to break even in 202. Note: Do not round Intermedlate colculatlons