3. Vargo Industries has computed its breakeven level of output to be 25,000 units. Based on forecasts from its sales force and past experience, expected unit sales are 32,000, with a standard deviation of 5,200. What is the probability that Vargo will have operating losses? Assume that sales are normally distributed.
4. Logue Lock Company expects its fixed costs next year to be $750,000. The selling price for its lock is $40. Logue is considering the purchase of new equipment that is expected to reduce unit variable costs from a current level of $25 to a new level of $20. How large could the additional fixed costs from the new equipment be without affecting the breakeven point?