The Garret Company manufactures and sells pens. Currently, 5,100,000 units are sold per year at $ 0.60 per unit. Fixed costs are $ 860,000 per year. Variable costs are $ 0.40 per unit. Consider each case separately:
1. a. What is the current annual operating income?
b. What is the present breakeven point in revenues?
Compute the new operating income for each of the following changes:
2. A $0.04 per unit increase in variable costs
3. A 10% increase in fixed costs and a 10% increase in units sold
4. A 20% decrease in fixed costs, a 20% decrease in selling price, a 10% decrease in variable cost per unit,
and a 40% increase in units sold
Compute the new breakeven point in units for each of the following changes:
5. A 10% increase in fixed costs
6. A 10% increase in selling price and a $20,000 increase in fixed costs