3.

20

Doral Company 5,000,000 $0.50 $2,500,000 A B C

Units sold per year Price per unit Annual Revenue

Fixed Cost Variable Cost (per unit) Total Variable cost 1a 1 b. Operating Income Break even revenue

$900,000 $0.30 $1,500,000 $100,000 $2,250,000

D E F C-D-F D /(1- (E/B))

A $0.04 per unit increase in variable costs New Variable cost per unit Total Variable cost Operating Income $0.34 $1,700,000 ($100,000) G H C -D - H

10% increase in fixed cost 10% increase in units sold New Fixed Cost Units sold per year New Revenue Operating revenue $990,000 5,500,000.0 $2,750,000 $260,000 I J K K-I-F

A 20% decrease in fixed costs, a 20% decrease in selling price, a 10% decrease in variable cost per unit, and a 40% increase in units sold Units sold per year Price per unit Annual Revenue 7,000,000 $0.40 $2,800,000 L

Fixed Cost Variable Cost (per unit) Total Variable cost Operating Income

$720,000 $0.27 $1,890,000 $190,000

M N L-M-N

5 A 10% increase in fixed costs Units sold per year Price per unit Annual Revenue Fixed Cost Variable Cost (per unit) Total Variable cost Breakeven units 5,000,000 $0.50 $2,500,000 $990,000 $0.30 $1,500,000 4,950,000 P Q

P/(O-Q)

6 A 10% increase in selling price and a $20,000 increase in fixed costs Units sold per year Price per unit Annual Revenue Fixed Cost Variable Cost (per unit) Total Variable cost Breakeven units 5,000,000 $0.55 $2,750,000 $920,000 $0.30 $1,500,000 3,680,000 P Q

P/(O-Q)

ble cost per unit, and