25

Stenback Company sells flags with team logos. Stenback has foxed costs of $520,000 per year plus variable costs of $6.50 per flag. Each flag sels for $13.00. Read the requirements Requirement 1. Use the equabon approach to eompute the number of fags Stenback must sell each year to broak even. First, select the formula to compute the required sales in units to break even. Requirements 1. Use the equation approach to compute the number of flags Stenback must sell each year to break even. 2. Use the contribution margin ratio approach to compute the dollar sales Stenback needs to eam $19,500 in operating income for 2018 . (Round the contribution margin ratio to two decimal places.) 3. Prepare Stenback's contribution margin income statement for the year ended December 31, 2018, for sales of 77,000 flags. (Round your final answers up to the next whole number.) 4. The company is considering an expansion that will increase fixed costs by 40% and variable costs by $1.30 per flag. Compute the new breakeven point in units and in dollars. Should Stenback undertake the expansion? Give your reasoning. (Round your final answers up to the next whole number.)