EXERCISE 6-17 (30 MINUTES)

3. If a bonus of $0.10 per unit is paid for each unit sold in excess of the

break-even point, then the contribution margin on these units would

drop from $1.60 to $1.50 per unit.

The desired monthly profit would be:

25% × ($35,000 + $1,000) = $9,000

Thus,

Target profit = $9,000 =6,000 units

Unit contribution margin $1.50 per unit

Therefore, the company must sell 6,000 units above the break-even

point to earn a profit of $9,000 each month. These units, added to the