Questions:
1. Apollo Company manufactures a single product that sells for $168 per unit and whose total variable costs are $126 per unit. The company's annual fixed costs are $630,000. (1) Use this information to compute the company's (a) contribution margin, (b) contribution margin ratio, (c) break-even point in units, and (d) break-even point in dollars of sales.
2. (1) Prepare a contribution margin income statement for Apollo Company showing sales, variable costs, and fixed costs at the break-even point. (2) If the company's fixed costs increase by $135,000, what amount of sales (in dollars) is needed to break even? Explain.