Redlands, Inc. sells one product for $5.00 per unit. Each item costs $4.00 in material and labor to produce. Redlands has $60 of fixed costs.

Required: Complete the following.

1. The breakeven point in number of units is ________.

2. The breakeven point in sales revenue is $_______.

3. The number of units Redlands must sell if it desires a $40 profit is ________.

4. The amount of sales revenue needed for Redlands to earn a $120 profit is $________.

5. If Redlands increased its fixed costs to $130 (from $60), it could decrease its variable cost per unit to $3.00 (from $4.00). Assuming Redlands can sell 110 units regardless of cost structure, should it change to the new cost structure?

Yes or No (circle one)