Fine Candles Ltd has prepared the following draft profit analysis for the current year.

Required
Answer each of the following four independent situations.
(a) If the company’s manager is considering increasing his salary by \($42\) 500, how much must dollar sales increase to maintain the company’s current profit?
(b) If the company changes its marketing approach, it is expected that variable expenses will increase 10%, fixed expenses will decrease 15% and sales units and dollars will increase 20%. Calculate the company’ break-even point in terms of sales dollars if the new strategy is adopted. Assume that the sales price per unit would not be changed. Round your answer to the nearest dollar.
(c) If the company decreases sales commissions, variable expenses will decrease by 10%. The company believes that unit sales will decrease 5% because of a loss of sales representatives, even though the company plans to increase its advertising budget by \($25\) 000. Should the company decrease the sales commissions?
(d) If the company’s profit increases 100% next year because of a 35% increase in sales, will performance be better or worse than expected? Assume adequate capacity exists to meet the increased volume without increasing fixed costs.

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Sales (150 000 units) Variable expenses Contribution margin Fixed expenses Profit $1200000 690 000 510000 217600 $ 292 400