Break-even point, what-if analysis The following information pertains to Tora-
sic Company's budgeted income statement for the month of June 2000:

REQUIRED

(a) Determine the company's break-even point in both units and dollars.

(b) The sales manager believes that a $22,500 increase in the monthly advertising expenses will result in a considerable increase in sales. How much of an in¬ crease in sales must result from increased advertising to justify this expenditure?

(c) The sales manager believes that an advertising expenditure increase of $22,500 coupled with a 10% reduction in the selling price will double the sales quantity. Determine the net income (or loss) if these proposed changes are adopted.(LO 8)

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Sales (1200 units @ $250) $300,000 Flexible cost -150,000 Contribution margin $150,000 Capacity-related cost Net loss -200,000 ($ 50,000)