The 2000 pro-forma income statement for Cedar Co. is as follows (ignore taxes):

Required: 1. Compute how many units must be sold to break even. 2. Compute the increase (decrease) in income under the following independent situations:

a. Sales increase 30 percent.

b. Fixed selling and administrative expenses decrease 10 percent.

c. Contribution margin decreases 20 percent. 3. Compute sales in units and dollars at the break-even point if fixed costs increase from $186,000 to $260,400. 4. Compute the number of units that must be sold if expected profit is $1 million.

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Sales (60,000 units).. Cedar Co. Pro-Forma Income Statement For the Year Ended December 31, 2000 Cost of goods sold: Direct materials. Direct labor....... Variable manufacturing overhead Fixed manufacturing overhead. Total cost of goods sold Gross margin. Selling expenses: Variable Fixed $660,000 $40,000 75,000 18,000 11,000 144,000 $516,000 $45,000 98,000 Administrative expenses: Variable... 17,000 Fixed 77,000 Total selling and administrative expenses. 237,000 Income $279,000