The McKnight Company manufactures and sells pens. Currently, $5,000,000 units are sold per year at $ 0.50 per unit. Fixed costs are $ 870,000 per year. Variable costs are $ 0.30 per unit.

Consider each case separately:

1.

a. What is the current annual operating income?

b. What is the current breakeven point in revenues?

Compute the new operating income for each of the following changes:

2.A $0.05 per unit increase in variable costs

3.A 10% increase in fixed costs and a 10% increase in units sold

4. A 40% decrease in fixed costs, a 40% decrease in selling price, a 30% decrease in variable cost per unit, and a 45% increase in units sold

Compute the new breakeven point in units for each of the following changes:

5.A 10% increase in fixed costs

6.A 10% increase in selling price and a $ 40 comma 000 increase in fixed costs