Analysis for this information

Original Break-even calculations:

The original operating income is calculated by subtracting the fixed costs from the contribution margin. The contribution margin is the difference between the total sales and the variable costs. In this case, the total sales are 100,000 (1,000 shoes sold at $100 each), and the variable costs are 40,000 (40% of the total sales). So, the contribution margin is 60,000 (100,000 - 40,000). The fixed costs are given as 35,000. Therefore, the operating income is 25,000 (60,000 - 35,000).

The break-even point is calculated by dividing the fixed costs by the contribution margin per unit. The contribution margin per unit is the selling price per unit minus the variable cost per unit. In this case, the selling price per unit is $100, and the variable cost per unit is $40 (40% of $100). So, the contribution margin per unit is $60 ($100 - $40). Therefore, the break-even point is 583.33 units (35,000 / 60).

1. Revised Break-even after extra $1,500 of advertising:

The new break-even point is calculated in the same way as the original break-even point, but with the revised figures. The new sales are 150,000 ((50% x 1,000) + 1,000) x $100), and the new variable costs are 63,000 (150,000 x 42%). So, the new contribution margin is 87,000 (150,000 - 63,000). The new fixed costs are 36,500 (35,000 + 1,500). Therefore, the new operating income is 50,500 (87,000 - 36,500).

The new contribution margin per unit is $87 (150,000 / 1,500 units), and the new variable cost per unit is $42 (63,000 / 1,500 units). So, the new break-even point is 629.31 units (36,500 / 55).