Flip had sales of $10,000 (100 units at $100 per). Manufacturing costs consisted of direct labor $1,500, direct materials $1,400, variable factory overhead $1,000, and fixed factory overhead $500. The company did not maintain any inventories, so total cost of goods sold was $4,400. Selling expenses totaled $1,600 ($600 variable and $1,000 fixed), and administrative expenses totaled $1,500 ($500 variable and $1,000 fixed). Operating income was $2,500. Round all final answers to nearest dollar or whole number.
Requirements:
a. What is the breakeven point in sales dollars and in units if the fixed factory overhead increased by $1,700?
b. What is the breakeven point in sales dollars and in units if costs remain as originally projected?
c. What would be the operating income be if sales units increased by 25%