Fowler Company produces a product that sells for $200 per unit and has a variable cost of $125 per unit. Fowler incurs annual fixed costs of $450,000.

Fowler Company produces a product that sells for $200 per unit and has a variable cost of $125 per unit. Fowler incurs annual fixed costs of $450,000.

Required

1. Determine the sales volume in units and dollars required to break even. (Do not round intermediate calculations.)
2. Calculate the break-even point assuming fixed costs increase to $600,000. (Do not round intermediate calculations.)
    
   N = Number of units to break-even
   Sales – Variable cost – Fixed cost = Profit
   (Sales price × N) − (Variable cost per unit × N) = Fixed cost + Profit
   (Contribution margin per unit × N) = Fixed cost + Profit
   N = (Fixed cost + Profit) ÷ Contribution margin per unit
   
   a.
   N = ($450,000 + $0) ÷ ($200 − $125) = 6,000 units
   Sales in $ = $200 × 6,000 units = $1,200,000
   
   b.
   N = ($600,000 + $0) ÷ ($200 − $125) = 8,000 units
   Sales in $ = $200 × 8,000 units = $1,600,000