2. Cost-Volume-Profit: 15 marks Zachary Adams has recently been hired as the marketing manager by Luxon Limited. Adams is convinced that Luxon should launch a major new promotion in August that includes a tie-in with a new movie. For every one of Luxon's products sold, the customer would be given a free ticket to the movie (this is a limited time offer). Luxon's budgeted income statement for August, based on sales of 6,000 units without introducing the new promotion, was as follows: Sales revenue Less: Variable costs Contribution margin Less: Fixed costs Profit $480,000 336.000 144,000 105.000 Adams has conducted some market research and concluded that the sales by 4,000 units per month. The fixed costs for this promotion would be $2,800 and a movie ticket would cost Luxon $9 promotion would increase Required: (a) Calculate the breakeven point in units and the margin of safety percentage based on Luxon's budgeted income statement for August (round your answer to two decimal places) (3 marks) (b) Explain why the company might find it useful to know its breakeven point and margin of safety (2 marks) (c) What would the breakeven point and profit be if Luxon takes up the promotion suggested by Adams? How many units would Luxon need to sell to achieve August's budgeted profit of $39,000 if Luxon goes ahead with the promotion? (Round your answer up to the nearest unit) (ii) iii) Comment on the marketing manager's proposal, taking into account the expected impact on profits and on the breakeven point. State any assumptions you need to make. (7 marks) (d) Two companies have identical sales revenue of $150,000. Is it true that both have the same operating income and the same margin of safety? Is it possible that one company has a higher margin of safety? Explain