Super Sales Company is the exclusive distributor for a high-quality knapsack. The product sells for $90 per unit and has a CM ratio of 20%. The companys fixed expenses are $540,000 per year. The company plans to sell 32,000 knapsacks this year.

Required:

1. What are the variable expenses per unit?

Variable expenses per unit

2. Use the equation method for the following:

a. What is the break-even point in units and in sales dollars?

Break-even point in units
Break-even point in sales dollars

b. What sales level in units and in sales dollars is required to earn an annual profit of $108,000?

Sales in units
Sales in dollars

c. What sales level in units is required to earn an annual after-tax profit of $108,000 if the tax rate is 20%?

Sales in units

d. Assume that through negotiation with the manufacturer, Super Sales Company is able to reduce its variable expenses by $9 per unit. What is the companys new break-even point in units and in sales dollars? (Do not round intermediate calculations. Round your final answers to the nearest whole number.)

New break-even point in units
New break-even point in sales dollars

3. Use the formula method for the following:

a. What is the break-even point in units and in sales dollars?

Break-even point in units
Break-even point in sales dollars

b. What sales level in units and in sales dollars is required to earn an annual profit of $108,000?

Sales in units
Sales in dollars

c. What sales level in units is required to earn an annual after-tax profit of $108,000 if the tax rate is 20%?

Sales in units

d. Assume that through negotiation with the manufacturer, Super Sales Company is able to reduce its variable expenses by $9 per unit. What is the companys new break-even point in units and in sales dollars? (Do not round intermediate calculations. Round your final answers to the nearest whole number.)

New break-even point in units
New break-even point in sales dollars