• The materials include $6,500 for the wood and other materials on a per job basis.
• It requires 45 hours of labor on average for the cabinetry. The hourly rate is $12.
• The sales price will be set at a markup of 65%.
• The company estimates that it will have 90,000 direct labor hours in total for the cabinets.
• It assumes 2000 units are sold on average per year.

A breakdown of estimated yearly costs for the 2000 units follows:

	Salaries- office & administrative				$ 650,000
	Salaries for factory supervisor, janitor and security				$ 400,000
	Office Rent				$ 350,000
	Factory Rent				$ 100,000
	Office utilities and Misc office expenses(based on units sold)				$ 45,000
	Sales travel(based on units sold)				$ 24,000
	Insurance - office				$ 60,000
	Depreciation - office equipment				$ 40,000
	Depreciation for factory equipment				$ 85,000
	Advertising				$ 220,000
	Sales commissions(based on units sold)				$ 450,000
	Factory Property taxes				$ 16,000
	Maintenance for factory equipment				$ 80,000

1. Prepare three CVP Income Statements using the following yearly volumes: 500, 2000 and 2500. Keep in mind how variable and fixed costs behave. The traditional income statement from #4 should be about the same net income as the 2000 units for the CVP format.
   1. Calculate Break-even in units and sales $ for the company
   2. Contribution margin ratio
   3. Calculate units and sales $ if the company wants a profit of $1,000,000.
   4. Margin of safety in dollars for 2000 units.