EXERCISE 6-1 (CONTINUED)

3. The new income statement would be:

Total Per Unit

Sales (9,000 units) ... $315,000 $35.00

Less variable expenses ... 180,000 20.00

Contribution margin ... 135,000 $15.00

Less fixed expenses... 135,000

Net operating income ... $ 0

Note: This is the company’s break-even point.