Steve Smith is ready to complete a cost-volume-profit analysis for the current year for the U.S. chocolate bar manufacturing plant to determine if the breakeven point is achieved. Specific costs for production of 400,000 units include the following:

 Swiss Chocolate Manufacturing Company

Variable   Costs Total

Fixed   Costs Total

Raw   materials

$           200,000

Direct   manufacturing labor

$           100,000

Indirect   manufacturing labor

$              52,500

Factory   insurance and utilities

$              31,500

Depreciation   — machinery and factory

$              38,500

Repairs   and maintenance — factory

$              14,000

Selling,   marketing, and distribution expenses

$              20,000

$              40,000

General   and administrative expenses

$              60,000

There are no beginning or ending inventories. The total sales for 400,000 units produced are $1,050,000.
Answer the following questions given the fact pattern above, showing all calculations.

• What is the contribution margin      per unit for each chocolate bar produced given the fact pattern above?
• What is the Swiss Chocolate’s      U.S. division breakeven point in units and dollars given the fact pattern      above?
• What is the Swiss Chocolate’s      U.S. division margin of safety and degree of operating leverage given the      fact pattern above?
• Assume the fact pattern above      changes. Swiss Chocolate would like to hire another salesperson at a fixed      salary of $40,000 per year to focus primarily on marketing through social      media. In addition, a drought in Brazil has resulted in higher costs for      its major raw material, cacao; raw material costs will increase 5 cents      per unit. Finally, the U.S. division’s parent in Switzerland has indicated      that its forecast target net income for the year is $150,000. What is the      level of sales in units and dollars required to achieve this targeted      level of net income? Assume a 30% tax rate.
• What cost increases, fixed or      variable, result in the greatest challenge in realizing a desired level of      profit? In the context of Swiss Chocolate, explain your answer.