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Break-Even Units: Units for Target Profit

Jay-Zee Company makes an in-car navigation system. Next year, Jay-Zee plans to sell 16,000 units at a price of $320 each. Product costs include:

Direct materials	$68
Direct labor	$40
Variable overhead	$12
Total fixed factory overhead	$500,000

Variable selling expense is a commission of 5 percent of price; fixed selling and administrative expenses total $116,400.

Required:

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1. Calculate the sales commission per unit sold. $fill in the blank 00449ff51fcdff1_1 per unit

Calculate the contribution margin per unit. $fill in the blank 00449ff51fcdff1_2 per unit

2. How many units must Jay-Zee Company sell to break even? fill in the blank 00449ff51fcdff1_3 units

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Prepare an income statement for the calculated number of units. If an amount is zero, enter "0".

blank Jay-Zee Company Income Statement

Contribution marginFixed expensesSalesVariable expenses	$- Select -
Less: Contribution marginLess: Fixed expensesLess: SalesLess: Variable expenses	- Select -
Contribution marginFixed expensesSalesVariable expenses	$- Select -
Less: Contribution marginLess: Fixed expensesLess: SalesLess: Variable expenses	- Select -
Contribution marginFixed expensesOperating incomeOperating loss	$- Select -

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3. Calculate the number of units Jay-Zee Company must sell to achieve target operating income (profit) of $333,408. fill in the blank d53b9909f005029_1 units

4. What if the Jay-Zee Company wanted to achieve a target operating income of $322,000? Would the number of units needed increase or decrease compared to your answer in Requirement 3?

IncreaseDecrease

Compute the number of units needed for the new target operating income. fill in the blank d53b9909f005029_3 units