4 accounting calculations

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Dillon, Jones, and Kline, Ltd. is studying the acquisition of two electrical component insertion systems for producing its sole product, the universal gismo. Data relevant to the systems follow.

Model A:

Variable costs, $8.00 per unit

Annual fixed costs, $1,971,200

Model B:

Variable costs, $6.40 per unit

Annual fixed costs, $2,227,200

The selling price is $32 per unit for the universal gismo, which is subject to a 5 percent sales commission. (In the following requirements, ignore income taxes.)

How many units must the company sell to break even if Model A is selected? (Do not round intermediate calculations.)

2-a.		Calculate the net income of the two systems if sales and production are expected to average 184,000 units per year.
3.	Assume Model B requires the purchase of additional equipment that is not reflected in the preceding figures. The equipment will cost $900,000 and will be depreciated over a five-year life by the straight-line method. How many units must the company sell to earn $1,912,800 of income if Model B is selected? As in requirement (2), sales and production are expected to average 184,000 units per year.