a) What is JJE's break-even point in units?

b) What is JJE's Margin of Safety in dollars?

c) The new VP marketing has suggested a special promotion be run where units are sold at a discount of 8%. The promotion is expected to increase the units sold by 20%, but variable costs would increase by $2 per unit due to special packaging. The advertising associated with this campaign would cost $10,000. Should this promotion be run? Use incremental analysis.

Joseph's Jacket Emporium Inc. (JJE) sells one product: high quality jackets. JJE's contribution style income statement for the last fiscal year is below. Sales (1750 units) Variable costs Contribution Margin Fixed Costs Operating Income Income Tax Expense (25%) Net Income 500,000 300,000 200,000 140,000 60,000 15000 45,000