You are currently trying to decide between two cost structures for your business, one that has a greater proportion of short-term fixed costs, the other that is more heavily weighted to variable costs. Estimated revenue and cost data for each alternative is as follows:

Required

1. What sales volume, in units, is needed for the total costs in each cost-structure alternative to be the same?

2. Suppose your profit goal for the coming year is 5 percent on sales (i.e., operating profit/sales = 5%). What sales level in units is needed under each alternative to achieve this goal?

3. Suppose again that your profit goal for the coming year is 5 percent on sales. What sales volume in dollars is needed under each alternative to achieve thisgoal?

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Cost Structure Alternative 1 Alternative 2 Selling Price per Unit Variable Costs per Unit Total Fixed Costs (per Year) $100.00 s100.00 $85.00 $80.00 $40,000 $45,000