year. ER (CMA Adapted) 0-5) 10-54 Profit Planning and What If Analysis As a newly hired management accountant, you have been asked to do some what-if analyses. Following is the budgeted information regarding the coming yet asked to prepare a profit plan for the company for which you work. As part of this task. you've been $ 100.00 70.00 1,200,000 Fixed costs (per year) Selling price per unit Variable cost per unit Required 2. Assume that the goal of the company is to earn a pretax (operating profit of $300,000 for the 1. What is the breakeven volume, in units and dollars, for the coming year? coming year. How many units would the company have to sell to achieve this goal? 3. Assume that of the $70 variable cost per unit the labor-cost component is $25. Current nego tiations with the employees of the company indicate some uncertainty regarding the labor cost component of the variable cost figure presented above. What is the effect on the breakeven point in units if selling price and fixed costs are as planned, but the labor cost for the coming year is an higher than anticipated? What if labor costs are 6% higher than anticipated? What if labor cost turn out to be 8% higher than anticipated? (Show calculations.) 4. Assume now that management is convinced that labor costs will be 5% higher than originally planned when the budget for the year was put together. What selling price per unit must the com pany charge to maintain the budgeted ratio of contribution margin to sales? Round your answer to 2 decimal places. (Hint: Use the Goal Seek function in Excel to answer this question.) 5. Explain the role of what-if analysis in the budgeting process