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1. Calculate the annual breakeven point, both in terms of units and in terms of sales dollars.

2. If Bubba's sells 22,000 hats, what is its before-tax income or loss? Support your answer by preparing a contribution income statement.

3. If Bubba's sells 34,000 hats, what is its margin of safety (MOS) and MOS ratio?

4. Bubba is considering the elimination of sales commissions completely and increasing salaries by $172,500 annually. What would be the new breakeven point in units? What would be the before-tax income or loss if 22,000 hats are sold with the new salary plan?

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The categories in the income statement can be changes ex) Add: Variable cost, Operating Loss

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Top Answer

1) Breakeven point (units) = 21,590 Breakeven point (Sale dollars) =... View the full answer

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