Problem: Cost Volume Profit Analysis - Nixon Company
The estimates made for Nixon Company, a one-product company, are as follows:
Nixon Company Projected Income Statement For The Year Ended December 31, 1995 Sales revenue (100 units x $100 per unit) $10,000Manufacturing cost of goods sold:Direct materials $1,400Direct labour 1,500Variable overhead 1,000Fixed overhead 500 4,400Gross margin 5,600Selling and administrative expenses:Variable 1,100Fixed 2,000 3,100Operating income $ 2,500
Required:
a. How many units of the product must Nixon sell to break even?
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.