Income Statement and Break-Even Analysis Zimmerman Company records the following costs associated with the production and sale of a steel slingshot:

Required:
Assume that in 2009 the beginning and ending inventories were the same. Also assume that 2009 sales were 25,000 units at $11 per slingshot.
1. Prepare a contribution margin income statement.
2. Determine the break-even point in sales dollars.
3. Interpretive Question: Zimmerman believes that sales volume could be improved 20%
if an additional commission of $0.50 per unit were paid to the salespeople. Zimmerman also believes, however, that the same percentage increase could be achieved through an increase of $3,000 in annual advertising expense. Which action, if either, should Zimmerman take? Why?

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Selling expenses: Fixed Variable Administrative expenses: Fixed Variable Manufacturing costs: Fixed Variable $20,000 $0.50 per unit sold $4,500 $0.25 per unit sold $35,000 $7.50 per unit produced