4. Jenner Companys most recent contribution format income statement is presented below:

Sales $ 125,000

Less variable expenses 50,000

Contribution margin 75,000

Less fixed expenses 80,000

Net income (loss) $ ( 5,000)

The company sells its only product, SAA, for $20 per unit.

Required:

1 a) Compute the number of units sold in the year

1 b) Compute the variable cost per unit.

4 b) Compute the companys break-even point in units sold and in sales dollars.

3 c) How many units would have to be sold to earn a target profit of $10,500 before tax? What would be the total sales dollars at this volume of sales?

4 d) The sales manager is convinced that an $8,000 increase in the advertising budget would increase total sales by 25%. Would you advise them to increase their advertising outlay?

3 e) The production manager believes that the addition of an automated production line would decrease variable costs by $2 per unit. The annual fixed cost for the new production line would be $18,000. What will be the new breakeven point in units sold, if the production line was acquired and variable costs decreased as predicted? Should they acquire the production line?