Solution:

(a) Calculation of Sales and Variable Cost

Given,
Fixed Cost = $4000
Breakeven Sales = $20000
Profit = $1000
Selling price per unit = $20

We know that,
Breakeven Sales = Fixed Cost / Contribution Margin

Contribution Margin = Selling Price per unit - Variable Cost per unit

Let's assume variable cost per unit as X.

Therefore,
20000 = 4000 / (20 - X)
5 - X / 20 - X = 4 / 20
X = $4

Hence,
Variable cost per unit = $4

Contribution Margin = Selling Price per unit - Variable Cost per unit
= 20 - 4
= $16

Now,
Profit = Sales - Variable Cost - Fixed Cost
1000 = Sales - 16S - 4000
Sales = $6250

Therefore,
Sales = $6250
Variable Cost = $4
Fixed Cost = $4000

(b) Calculation of New Break Even Point if selling price is reduced by 10%

Given,
Selling Price per unit = $20
Reduced Selling Price per unit = $18

Let's assume variable cost per unit as Y.

Therefore,
New Breakeven Sales = Fixed Cost / Contribution Margin

Contribution Margin = Reduced Selling Price per unit - Variable Cost per unit
= 18 - Y

New Breakeven Sales = Fixed Cost / (18 - Y)

But we know that,
Breakeven Sales = Fixed Cost / Contribution Margin

Therefore,
New Breakeven Sales = Breakeven Sales * (Selling Price per unit / Reduced Selling Price per unit)
= 20000 * (20 / 18)
= $22222.22 (approx.)

Hence,
New Breakeven Point = $22222.22 (approx.)

Explanation:

The given information in the question is used to calculate the sales, variable cost, and breakeven point. The formula for breakeven point is used to calculate the sales and variable cost. The formula for profit is used to calculate the sales. The formula for new breakeven point is used to calculate the new breakeven point if the selling price is reduced by 10%.