54 4. Sports Specialty Products, Inc. manufactures and distributes various sports memorabilia 5 products. A contribution income statement is given below: Sales Variable Expenses Contribution Margin Fixed Expenses Net Operating Income Total $750,000 $450,000 $300,000 $200,000 $100,000 Per Unit $3.75 $2.25 $1.50 "5 Required: 56 1. Calculate Break Even Point in Units and Sales 7 2. The Sales manager is convinced that a $.25 reduction is selling price will increase sales by 15,000 units. 8 He realizes this will require an increase of $12,000 in advertising costs. Would you recommend this course of action. -9 Why or why not? 1 Sales 2 Variable Expenses 3 Contribution Margin 4 Fixed Expenses 5 Net Operating Income 8 Break Even Point Units Dollars 9 215,000 Units 10 11 12 Sales 13 Variable Expenses 14 Contribution Margin 15 Fixed Expenses 16 Net Operating Income 17 18 19