The sales manager believes the company could increase sales

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Reference no: EM13577731

FOX COMPANY

PROJECTED INCOME STATEMENT

FOR THE YEAR ENDING DECEMEBER 31, 2004




Revenues


$400,000




Variable Costs:



Variable manufacturing costs

$100,000


Variable selling costs

60,000


Total Variable Costs


160,000

Contribution Margin


$240,000




Fixed Costs:



Fixed manufacturing costs

$110,000


Fixed selling and administrative costs

70,000


Total Fixed Costs


180,000

Income


$60,000

The projected income statement was based upon sales of 20,000 units. Fox has the capacity to produce 25,000 units during the year.

  1. Determine breakeven point in units.
  2. The sales manager believes the company could increase sales by 3,000 units if advertising expenditures are increased by $30,000. Determine the effect on income if the company increases advertising expenditures.

Reference no: EM13577731

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