(Answered) Question - the income statement for baxter company for 2008

Accounting

Question - The income statement for Baxter Company for 2008 appears below.

BAXTER COMPANY Income Statement For the year Ended December 31, 2008

Sales (40,000 units)....................$1,000,000

Variable Expenses..........................700,000

Contribution Margin.......................300,000

Fixed Expenses.............................330,000

Net income (loss)........................$(30,000)

Instructions -

Answer the following independent questions and show computations using the contribution margin technique to support your answers:

1. What was the company's break-even point in sales dollars in 2008?

2. How many additional units would the company have had to sell in 2009 in order to earn net income of $30,000?

3. If the company is able to reduce variable costs by $2.50 per unit in 2009 and other costs and unit revenues remain unchanged how many units will the company have to sell in order to earn a net income of $35,000?

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