Problem 3-19B Effect of converting variable to fixed costs

Stackhouse Company manufactures and sells its own brand of digital cameras. It sells each camera for $250. The companys accountant prepared the following data:

Manufacturing costs
Variable	$90 per unit
Fixed	$300,000 per year
Selling and administrative expenses
Variable	$10 per unit
Fixed	$60,000 per year

Required

Use the per-unit contribution margin approach to determine the break-even point in units and dollars.

Use the per-unit contribution margin approach to determine the level of sales in units and dollars required to obtain a $120,000 profit.

Suppose that variable selling and administrative costs could be eliminated by employing a salaried sales force. If the company could sell 4,200 units, how much could it pay in salaries for the salespeople and still have a profit of $120,000? (Hint: Use the equation method.)