8. Teton, Inc. sells its only product for $50 per unit. Fixed expenses total $550,000 per year. Variable expenses are $1,200,000 when 40,000 units are sold.

a. Prepare a contribution margin income statement with per unit information at a volume of 40,000 units (similar to what we did in class or what is on slides) to determine operating income at that level of sales.

b. How many units must Teton sell to break even?

c. What is the dollar amount of sales at the break even level?

d. How many units must Teton sell if it wants income of $80,000?

e. Should we increase advertising $30,000 in order to increase sales by 1,000 units? Why?

f. If we decreased variable expenses by $5 per unit, but increased fixed costs by $50,000, what would the break even point be?

g. Which structure would you recommend if the company was poised to have a lot of sales growth? (Operating leverage)