Question 5(6 points)

XYZ had sales of $10,000 (100 units at $100 per). Manufacturing costs consisted of direct labor $1,500, direct materials $1,400, variable factory overhead $1,000, and fixed factory overhead $500. The company did not maintain any inventories, so total cost of goods sold was $4,400. Selling expenses totaled $1,600 ($600 variable and $1,000 fixed), and administrative expenses totaled $1,500 ($500 variable and $1,000 fixed). Operating income was $2,500. Round all final answers to nearest dollar or whole number.

Requirements:

1. What is the break-even point in sales dollars and in units if the fixed factory overhead increased by $1,700?
2. What is the break-even point in sales dollars and in units if costs remain as originally projected?
3. What would be the operating income if sales units increased by 25%?