The income statement for Hyland Company for 2014 appears below:
Hyland Company
Income Statement
For the Year Ended December 31, 2014
Sales revenue (40,000 units) 1,000,000
Variable expenses 700,000
Contribution margin 300,000
Fixed expenses 345,000
Net income (loss) (45,000)
Instructions
Answer the following independent questions and show computations to support your answers:
1. What was the company s break-even point in sales dollars in 2014?
2. How many additional units would the company have to sell in 2015 (compared to 2014) in order to
earn net income of $45,000?
3. If the company is able to reduce variable costs by $4.50 per unit in 2015 and other costs and unit
revenues remain unchanged, how many units will the company have to sell in order to earn a net
income of $45,000?