White Engine Company manufactures and sells diesel engines for use in small farming equipment. For its 2020 budget, White Engine Company estimates the following: (Click the icon to view the budget data.) The first-quarter income statement, as of March 31, reported that sales were not meeting expectations. During the first quarter, only 500 units had been sold at the current price of $4,500. The income statement showed that variable and fixed costs were as planned, which meant that the 2020 annual projection would not be met unless management took action. A management committee was formed and presen mutually exclusive alternatives to the president: (Click the icon to view the alternatives.) Read the requirements. Requirement 1a. If no changes are made to the selling price or cost structure, determine the number of units that White Engine Company must sell to break even. Select the formula labels, enter the amounts and calculate the breakeven number of engines. Fixed costs $ 5,660,000 Contribution margin per unit = Breakeven number of units $ 2,500 2,264 Requirement 1b. If no changes are made to the selling price or cost structure, determine the number of units that White Engine Company must sell to achieve its net income objective. Select the formula labels, enter the amounts and calculate the number of engines required to be sold to achieve a net income of $1,360,000. ( $ Fixed costs 5,660,000 + + $ Target operating income 1,700,000 +( ) $ Contribution margin per unit 2,500 Quantity of units required to be sold 2,944 Requirement 2. Determine which alternative White Engine should select to achieve its net income objective. Show your calculations. Evaluate each of the alternatives presented by the management committee, begin with alternative a. Alternative a. Alternative b. Revenues $ 13,342,500 6,800,000 Variable costs Contribution margin 6,542,500 5,660,000 Fixed costs Operating income 882,500 176,500 Income taxes 706,000 Net income More info a. Reduce the selling price by 15%. The sales organization forecasts that at this significantly reduced price, 2,900 units can be sold during the remainder of the year. Total fixed costs and variable cost per unit will stay as budgeted. b. Lower variable cost per unit by $850 through the use of less-expensive direct materials. The selling price will also be reduced by $900, and sales of 2,500 units are expected for the remainder of the year. c. Reduce fixed costs by 20% and lower the selling price by 20%. Variable cost per unit will be unchanged. Sales of 2,600 units are expected for the remainder of the year. Print Done Data table Selling price Variable cost per engine Annual fixed costs Net income Income tax rate 4,500 2,000 $ 5,660,000 $ 1,360,000 Print Done 20%