1. Texas Company produces one product that it sells for $50 per unit. In producing that product, Texas

1.  Texas Company produces one product that it sells for $50 per unit. In producing that product, Texas Company incurs variable costs of $35 per unit and fixed costs of $400,000. How many units of the product will Texas Company have to produce and sell to earn a profit of $42,000? 

2.  Alabama Corporation and California Corporation have the same sales and profits as follows: 

                  Alabama                       California

Sales                                  $1,000,000                     $1,000,000

Variable Costs                      600,000                         400,000

Contribution Margin            400,000                       600,000

Fixed Costs                            200,000                        400,000

Profit                                      200,000                        200,000

Using an operating leverage analysis, determine how much profits would increase for each company if each experienced a 10% increase in sales.

3.  Virginia, LLC, sells its product for $20 and incurs variable costs in producing that product of $8 per unit and total fixed costs of $10,000. Using the contribution margin ratio approach, calculate the number of units of the product that Virginia, LLC must sell to generate a profit of $14,400.

4.  Arkansas Company provided the following information at the end of 2010: 

Beginning balance in Work-In-Progress                         $300,000

Ending balance in Work-In-Progress                              350,000

Beginning balance in Finished Goods                            400,000

Ending balance in Finished Goods                                350,000

Direct materials costs                                               1,000,000

Direct labor costs                                                     2,000,000

Manufacturing overhead                                             2,000,000

Selling expenses                                                       300,000

General and administrative expenses                           200,000

Sales                                                                      8,000,000

Prepare an income statement for fiscal year 2010.