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Luxvano Co. produced and sold 65,000 units during the year at an average price of $20...

Luxvano Co. produced and sold 65,000 units during the year at an average price of $20 per unit. Variable manufacturing costs were $9 per unit, and variable marketing costs were $3 per unit sold. Fixed costs amounted to $220,000 for manufacturing and $80,000 for marketing. There was no year-end work-in-process inventory. Assume the income tax rate of 40%. REQUIRED: (Show your detailed computations!)

a. Compute Luxvano’s break-even point in sales dollars for the year.

b. Compute the margin of safety in units.

c. Compute the operating income (income before taxes).

d. Compute the sales units required to earn a net income (income after taxes) of $120,000 during the year.

e. If Luxvano’s variable manufacturing costs are expected to increase by 10 percent in the coming year, compute the selling price that would yield the same current contribution margin ratio in the coming year.

f. Compute the required sales units to achieve operating income of 20 percent of sales revenue.

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