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Super Sales Company is the exclusive distributor for a high-quality knapsack. The product sells for $80 per unit and has a CM ratio of 40%.

Super Sales Company is the exclusive distributor for a high-quality knapsack. The product sells for $80 per unit and has a CM ratio of 40%. The companys fixed expenses are $720,000 per year. The company plans to sell 23,000 knapsacks this year.

Required:

1. What are the 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?

b. What sales level in units and in sales dollars is required to earn an annual profit of $80,000?

c. What sales level in units is required to earn an annual after-tax profit of $80,000 if the tax rate is 20%?

d. Assume that through negotiation with the manufacturer, Super Sales Company is able to reduce its variable expenses by $4 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.)

3. Use the formula method for the following:

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

b. What sales level in units and in sales dollars is required to earn an annual profit of $80,000?

c. What sales level in units is required to earn an annual after-tax profit of $80,000 if the tax rate is 20%?

d. Assume that through negotiation with the manufacturer, Super Sales Company is able to reduce its variable expenses by $4 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.)

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