1) Nonesuch Company sells only one product at a regular price of $7.50 per unit. Variable expenses are 60 percent of sales and fixed expenses are $30,000. Management has decided to decrease the selling price to $6.00 in hopes of increasing its volume of sales.

What is the new break-even point in units for Nonesuch Company when the selling price is $6.00?

a 10,000 units

b 20,000 units

c 4,000 units

d 6,667 units

2)

Bugatti, Inc. decided to institute an advertising campaign that would cost $75,000. Variable costs will remain at $15 per unit. Bugatti is currently selling 100,000 units of its product at $25 per unit. The marketing department is estimating that there will be a 10 percent increase in sales volume. With all else remaining the same, what will be the result of this decision?

	An increase in sales of $25,000
	A decrease in operating income of $75,000
	An increase in operating income of $25,000
	none of the above