Problem:

The management of Leonard's Ltd. is involved in the preliminary analysis of a potential new product. The product will sell for $35 per unit and requires variable costs of $20 per unit. Fixed costs are anticipated to be $30,000 per month.

Required:

Question 1: What is break-even in units?

Question 2: What is break-even in dollars?

Question 3: What annual sales volume (in $) is needed to earn $130,000 before taxes?

Question 4: What is the margin of safety ratio, given the information in part 3?

Question 5: How many units must be sold each month to earn an annual after-tax profit of $325,000 given a tax rate of 40%?

Note: Explain all steps comprehensively.