a) Sales = T R = 1,200,000 VC = TVC / TR = 50%

FC = 400,000

TVC = 600,000

N.I. ( S – VC ) x – FC > N.I.= ( 1 – 0.5 )x – 400,000

0 = 0.5x – 400,000

i'm stuck on part D.

400,000 = 0.5x

X = 800,000

Break Even would have occurred at 800,000

b) Present > N.I. = TR – TC or TR – VC – FC

N.I. = 1,200,000 – 600,000 – 400,000

N.I. = 200,000

200,000 = ( 1 – 0.50)x – 400,000

200,000 = 0.50x – 400,000

600,000 = 0.50x

X = 1,200,000

Next year, the Number of units increases by 15%

1,200,000 * 1.15 = 1,380,000

N.I. = (1-0.50) 1,380,000 – 400,000

N.I. = 290,000

Net Income = 290,000 – 200,000

Net Income = 90,000

If sales increased by 15% next year the net income will increase by $90,000

a) New Fixed Cost * 90%

= 400,000 * 0.90

= 360,000

N.I. ( S- VC )x – FC

= (1 -0.50)* 1,200,000 – 360,000

= 600,000 – 360,000

Net Income = 240,000

240,000 – 200,000 = 40,000

The Net Income increases by 40,000

b) IF variable costs are 10% higher in the year ahead (but sales and fixed costs remain the same as last year), how much (in$) will the net income decrease?