Short Clips Pty Ltd produces television advertisements for local businesses. Provided information is as follows.

The company is supposed to achieve a 15% profit margin (profit ÷ marketing fees) and as the director of the company you have to sign off on any actions taken to meet this target. This requires you to understand each of the possible alternative actions.
Required
(a) With the current level of fees, what is the required profit to achieve the target profit margin?
(b) What is the CVP equation for Short Clips Pty Ltd and the break-even number of television advertisements per year?
(c) With the current pricing and variable cost structure, what level of sales are required to meet the company’s profit target?

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Marketing fees (52 television advertisements) Variable expenses Contribution margin Fixed expenses Profit $624 000 249 600 374 400 324 000 $ 50 400