The Unique Toys Company manufactures and sells toys. Currently, 300,000 units are sold per year at $12.50 per unit. Fixed costs are $880,000 per year. Variable costs are $7.00 per unit. Consider each case separately:
Required:
a. What is the current annual operating income?
What is the present breakeven point in revenues?
Compute the new operating income for each of the following changes:
A 10% increase in variable costs
A $250,000 increase in fixed costs and a 2% increase in units sold
A 10% decrease in fixed costs, a 10% decrease in selling price, a 10% increase in variable cost per unit, and a 25% increase in units sold
Compute the new breakeven point in units for each of the following changes:
A 20% increase in fixed costs
A 12% increase in selling price and a $30,000 increase in fixed costs