-Rhin CPL Problem III The income statement for Rentin Company for 2016 appears below. Rortin COMPANY Income Statement For the Year Ended December 31, 2016 Sales (40,000 units) Variable expenses Contribution margin Fixed expenses Net income (loss). $1,000,000 700.000 300,000 330.000 130.000) Instructions Answer the following independent questions and show computations using the contribution margin technique to support your answers: 1. What was the company's break-even point in sales dollars in 2016? 2. How many additional units would the company have had to sell in 2016 in order to earn net income of $30,000? 3. If the company i able to reduce variable costs by $2.50 per unit in 2017 and other costs and unit revenues remain unchanged, how many units will the company have to sell in order to eam a net income of $35,000? Solution Problem III Break-even point in sales dollars in 2016 Contribution Margin Ratio 1. $7.50 25 = 30% Additional units would Reprin have had to sell in 2016 2 Additional units -30% 30,000 - 9,000 units 2017 nited States) 111 C 1. What was the company's break-even point in sales dollars in 2016? 2. How many additional units would the company have had to sell in 2016 in order to earn net income of $30,000? 3. If the company is able to reduce variable costs by $2.50 per unit in 2017 and other costs and unit revemes rernain umchanged, how many imits will the company have to sell in order to earn a net income of $35,000? Solution Problem III Break-even point in sales dollars in 2016 Contribution Margin Ratio 1. $7.50/25 - 30% Additional units would Rorrin have had to sell in 2016 Additionals units - 30% 30,000 - 9,000 imits 2. 3. Units will Rgprin have to sell in order to earn a net income of $35,000 in 2017 2016 Variable cost per unit $ Variable cost reduction 2017 Variable cost per unit $ Expected Contribution margin for 2017: Necessary Sales Units in order to eam a net income of $35,000 in 2017