Number of units sold: 606,000/60=10,100

Variable cost per unit:

Direct materials: $193,400
Direct labour: $59,100
Manufacturing overhead: $20,900
Selling expenses: $20,300
Administrative expenses: $9,300
Total: $303,000
Number of units 10,100
$30

Fixed costs: $30,200 + $18,300 + $10,900= $59,400

Contribution margin per unit: $60-$30= $30

(1) monthly break-even in units: $59,400/12/30= 165 units

(2) monthly break-even in dollars: 59,400÷12÷0.5= $9,900
9,900
Contribution margin ratio: $30 ÷ $60 = 50%
Annual break-even: $59,100 ÷ 0.50= $118,200
Margin of safety ratio: ($606,000 – $118,200) ÷ $606,000 = 80%
Annual profit: $606,000 – $303,000 – $59,400 = $243,600

20% increase in selling price: $60 × 0.20 = $12 per unit

Increase in contribution margin and profit: 10,100 × $12 per unit = $121,200
Percent increase in profit: $121,200 ÷ $243,600 = 49.75% (rounded)

Increase in fixed costs: $59,400 × 0.20 = $11,880

Increase in CM required to cover increased fixed costs: $11,880
Increase in unit sales required: $11,880 ÷ $30 = 396 units
Percent increase in unit sales: 396 ÷ 10,100 = 3.92%

Before-tax operating income: $391,800 ÷ (100% – 40%) = $653,000

Target sales:
($59,400 + $653,000) ÷ 0.60 = $1,424,800