The estimates made for Nixon Company, a one-product company, are:
Nixon Company Projected Income Statement for the year ended December 31, 1995
Sales revenue (100 units x $100 per unit)
Manufacturing cost of goods sold:
Direct materials
$1,400
Direct labour
1,500
Variable overhead
1,000
Fixed overhead
500
4,400
Gross margin
5,600
Selling and administrative expenses:
Variable
1,100
Fixed
2,000
3,100
Operating income
$2,500
Required:
a. How many units of the product must Nixon sell to breakeven?
b. What would be the operating income if projected units increased by 25%?
c. What would dollar sales be at the breakeven point if fixed overhead increased by $1,700.
