Petrako Manufacturing Company makes special filters for the heavy equipment industry. Actually, the company produces and sales between 120,000 and 130,000 units per month (at 85% production capacity) During September 2021 the following selected accounts summary was taken from the accounting records:

Units produced and sales.110,000

Direct Materials per unit is . $ 5

Direct Labor per unit is $ 4

Variable overhead per unit is... $ 1

Variable selling expenses per unit sold $ 3

Total variable costs $13

Fixed costs:

Manufacturing overhead $500,000

General and administrative 200,000

Accordingly, to the production and sales budget for October 2021, the management projected sales of 125,000 units at $30 each.

1. prepare a projected Contribution Margin income statement for October 2021, including the contribution margin per unit in dollars of sales and contribution margin ratio (percentage)

2. Calculate the break-even point in units and dollars of sales.

3. If the fixed costs increase by 20%, What happened to the break-even point in sales and units to be sold?

4. If the fixed costs decrease by 10%, What happened to the break-even point in sales and units to be sold?

5. If sales increase by 10%, by what amount and percentage will operating income increase?

6. How many units must the company produce and sells to earn $1,600,000 in October?

7. If the company want a net income (after-tax) of $1,300,000 for October (the company average tax rate is 21%) how many units must will be sold?

8. What happened to the break-even in sales and units if Direct Labor costs increase to $5?

9. What happened to the break-even point and operating income for October if the company agree with an external contractor to run selling expense (actually variable) for a monthly fixed payment of $300,000? Is a good proposal?

10. Petrako has received an offer from Mexican company to buy 10,000 filters at $22 per unit. If Petrakos accepted the proposals the variable selling cost increase to $3.50 per unit (actually is $3), and increase in fixed general and administrative cost of $15,000. This sale would not affect national sales or their costs. Using only financial amounts factors, should Petrakos may be accepting the proposal of Mexican Company?