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1. Giga manufacturing company’s monthly operating income if it sold 400,000 units

                                                Units sold         Unit Price         Total

Sales                                        400000            $20                  $8,000,000

Less Total Variable Cost          400000            $14                  $5,600,000

Contribution                                                                             $2,400,000

Less Total Fixed Cost                                                               $2,800,000

Operating Income                                                                     – $400,000

The company incurred a loss of $400,000.

1. Direct labor per unit =( 1.16 * $6)= $6.9

Total fixed costs after increment = ($2,800,000+$400,000) =$3,200,000

Break-even point in units: Sales – Total Variable costs – Total fixed costs =0

$20*x – $14.9*x – $3,200,000=0, where x = units sold.

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