The ABC Music Company is a local company that retails music instruments. They also have a recording studio. The company has produced a Christmas Song record/CD that is sold for $15. The contribution margin ratio is 30%. Fixed expenses total $6,750.

Instructions

a. Calculate the variable cost per unit for the record/CD.

b. Calculate how many units will have to sell in order to break even.

c. Calculate how many units will have to sell in order to make a target net income of $20,000.

d. Prepare the Cost Volume Profit (CVP) income statement when the net income is $20,000.