Chapter 5, Problem 25P

To determine

Fixed cost: The cost which is rigid in nature and does not change with the level of production or sale is called fixed cost.

Variable cost:The cost which varies with the change in the level of production or fixed cost is called variable cost.

1. The Break-even point in unit sales and dollar sales.

2. The required sales in units to attain a target profit of $12,000 per month.

3. The required sales units to attain a target profit that equals a 25% return on the monthly investment in fixed expenses.