ABC Hotel Limited (ABCHL) operates a small store selling spa oil. ABCHL sells each unit for $80. Variable costs per unit equal $40. Total fixed costs equal $460,000. ABCHL is currently selling 12,000 units per period. The management would like to earn net income of $80,000.

ABCHL considers whether a promotion campaign to be carried out in next year. The cost of the promotion campaign is $100,000. The expected increase in unit of sales is 20% and 30% if the selling price is $80 and $72 respectively.

(a) Compute: (i) Contribution margin per unit in dollars. (ii) Contribution margin percentage. (iii) Break-even point in dollars. (iv) Break-even in units. (v) Sales units necessary to attain desired income of $80,000. (vi) Margin of safety ratio for current operations.

(b) Should ABCHL carry out the promotion campaign in next year. Justify your answer by showing all relevant calculations.