In 2016, Manhoff Company had a break-even point of $350,000 based on a selling price of $5 per unit and fixed costs of $112,000. In 2017, the selling price and the variable costs per unit did not change, but the break-even point increased to $420,000.

Required:

1. Compute the variable costs per unit and the contribution margin ratio for 2016.

2. Compute the increase in fixed costs for 2017.

The management of a supermarket wants to adopt a new promotional policy of giving a free gift to every customer who spends > a certain amount per visit at this supermarket. the expectation of the management is that after this promotional policy is advertised, the expenditures for all customers at this supermarket will be normally distributed with a mean of $95 and a standard deviation of $20. if the management wants to give free gifts to at most 10% of the customers, what should the amount be above which a customer would receive a free gift?