Question -

a) How much sales are required to earn a target income of $80,000 if total fixed costs are $100,000 and the contribution margin ratio is 40%?

b) Fixed costs are $400,000 and the contribution margin per unit is $80. What is the break-even point?

c) At the high level of activity in October, a company used 6,000 machine hours resulting in a utility cost of $12,000. In March, a month of low activity, 3,500 machine hours were used, and utility costs totaled $7,500. If the company uses the high-low method, how much of the utility cost is fixed cost?