4-b. PREPARE A CONTRIBUTION INCOME STATEMENT AT THE NEW BREAKEVEN POINT

1. Projected operating profit $823,000

2. B.E units 18,067 units

3. O.P $766,850

4A. New B.E point 23,938 units

Connelly Inc., a manufacturer of quality electric ice cream makers, has experienced a steady growth in sales over the past few years Because her business has grown, Jan DeJaney, the president, believes she needs an aggressive advertising campaign next year to maintain the company's growth. To prepare for the growth, the accountant prepared the following data for the current year: Variable costs per ice cream maker Direct labor Direct materials Variable overhead $ 13.00 15.50 6.50 $35.00 Total variable costs Fixed cost $94,000 70,000 378,000 542,000 65 45,500 Manufacturing Selling Administrative Total fixed costs Selling price per unit Expected sales (units) Required 1. If the costs and sales price remain the same, what is the projected operating profit for the coming year? 2. What is the breakeven point in units for the coming year? 3. Jan has set the sales target for 49,500 ice cream makers, which she thinks she can achieve by an additional fixed selling expense of $176,150 for advertising. All other costs remain as per the data in the above table. What will be the operating profit if the additional $176,150 is spent on advertising and sales rise to 49,500 units? 4-a. What will be the new breakeven point if the additional $176,150 is spent on advertising? 4-b. Prepare a contribution income statement at the new breakeven point