Active Life manufactures wearable technology for a variety of purposes. The Athletics Division produces three models of a watch that monitors heart rate, steps taken, calories burned, distance covered, and other metrics related to personal health. Data for the three models are shown below:

The Athletics Division has the following fixed costs:

Sales, in units, over the past two months are shown below. The increased in total watches sold is attributable to a special advertising campaign focused on the Basic model. The manager of the Athletics Division believed there was an opportunity to boost sales for that model during the busy holiday season. The one-time advertising campaign in December cost $10,000.

Required

1. Without preparing an income statement, calculate operating income in both November and December.
2. Explain why operating income differs between the two months. Was the advertising campaign a success? Why or why not?
3. Compute the Athletics Division's break-even point in unit sales for November.
4. Has December's break-even point in units gone up or down from November's break-even point? Explain without calculating the actual break-even point for December.
5. Assume the sales mix stays the same in January as it was in December. Calculate the total contribution margin if 12,000 units are sold. Assume no change to the contribution margin per unit for any of the models in January.

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Selling price per watch.. Variable expenses per watch: Production... Sales commissions Total variable expenses.. Contribution margin per watch: Basic $160.00 88.00 32.00 120.00 $ 40.00 Advanced $240.00 108.00 24.00 132.00 $108.00 Elite $360.00 126.00 36.00 162.00 $198.00