1. XYZ Companys projected profit for the coming year is as follows:

	Total	Per Unit
Sales	$ 200,000	$ 20
Less: Variable costs	120,000	12
Contribution margin	$ 80,000	$ 8
Less: Fixed costs	64,000
Operating income	$ 16,000

Required:

1. Compute the break-even point in units sales.
2. How many units must be sold to earn a profit of $ 30,000?
3. Compute the contribution margin ratio. Using that ratio, compute the additional profit that XYZ would earn if sales were $ 25,000 more than expected.
4. Suppose XYZ would like to earn operating income equal to 20 percent of sales revenue. How many units must be sold for this goal to be realized?
5. Refer to the original data, compute the margin of safety.
6. Refer to the original data and assume that through a more intense effort by the sales staff, the company's sales increase by 8% next year. By what percentage would you expect net operating income to increase?

2. The cost-volume-profit analysis is a common technique to estimate break-even point in the practice. Briefly, criticize the use of this analysis technique in your company.