7. A firm estimates that it will sell 100,000 units of its sole product in the coming period.

It projects the sales price at $40

per unit, the CM ratio at 60 percent, and profit at $500,000. What is the firm budgeting for fixed costs in the coming
period?
a. $1,600,000
b. $2,400,000
c. $1,100,000
d. $1,900,000

8. Sombrero Company manufactures a western-style hat that sells for $10 per unit. This is its sole product and it has
projected the break-even point at 50,000 units in the coming period. If fixed costs are projected at $100,000, what is the
projected contribution margin ratio?
a. 80 percent
b. 20 percent
c. 40 percent
d. 60 percent