An Aircraft Manufacturing manufactures a small single-engine aircraft for general aviation use. The company is currently faring well and is looking to expand in the near future. The companys CEO, needs some basic questions answered in order to make decisions on when and how to expand.

In this assignment, you will serve as a managerial accountant and prepare the information the boss needs to make his decision. Below you will find last months contribution income statement.

Contribution Income Statement Sales of 5 Aircraft

	Total	Per Unit
Sales (5 aircraft)	$950,000	$190,000
Variable Expenses	285,000	57,000
Contribution Margin	665,000	133,000
Fixed Expenses	300,000
Net Operating Income	$365,000

1. Calculate the break-even point for the company.

2. Assuming the company continues to sell five aircraft a month, what is the lowest price at which the company can offer its aircraft and still make a profit?

3. The advertising department believes a $150,000 increase to their budgeted expenses will yield total sales of 8 aircraft per month. Would you advise the boss to allow this budget increase? How will this affect the companys overall profits?

4. The boss would like the company to obtain profits of $500,000 a month. At the current pricing and cost structure, how many aircraft would the company need to sell to reach this goal?