Miller Metal Co

Required:

a.

Calculate the number of units that must be sold each month for the firm to break even. (Do not round your intermediate calculations.)

b.

Assume current sales are $407,000. Calculate the margin of safety and the margin of safety ratio.

c.

Calculate operating income if 6,100 units are sold in a month. (Do not round your intermediate calculations.)

d.

Calculate operating income if the selling price is raised to $47 per unit, advertising expenditures are increased by $7,000 per month, and monthly unit sales volume becomes 6,500 units. (Do not round your intermediate calculations.)

e.

Assume that the firm adds another product to its product line and that the new product sells for $22 per unit, has variable costs of $14 per unit, and causes fixed expenses in total to increase to $84,000 per month. Calculate the firm's operating income if 6,100 units of the original product and 5,000 units of the new product are sold each month. For the original product, use the selling price and variable cost data given in the problem statement. (Do not round your intermediate calculations.)

f.

Calculate the firm's operating income if 3,000 units of the original product and 8,100 units of the new product are sold each month. (Do not round your intermediate calculations.)

g.

Why operating income is different in parts e and f, even though sales totaled 11,100 units in each case.