Light Up manufactures light fixtures. The company has been in business for 10 years. This market segment has become more competitive in the last 5 years. The sales and cost data for the light fixture sold and manufactured by Light Up are as follows:

Sales price $90 per unit

Variable cost $54 per unit

Total fixed costs $432,000

Instructions

Answer the following independent questions and show calculations to support your answers.

a. How many light fixtures must be sold to break even?

b. What are the total sales in dollars that must be generated for the company to earn an operating profit of $50,400?

c. If the company is presently selling 14,000 light fixtures, but plans to spend an additional $135,000 in fixed costs, how many additional units must the company sell to earn the same net income it is currently making?

d. Explain the benefits to the company in knowing the companys break even level.