Answer to #4 Please

Terry Medical Supply is a retailer of home medical equipment. Last year, Terry's sales revenues totaled $6,400,000. Total expenses were $2,800,000. Of this amount, approximately $1,792,000 were varlable, while the remainder were fixed. Since Terry's offers thousands of different products, its managers profer to calculate the breakeven point in terms of sales dollars rather than units. Read the requirements . Requirement 2. What is Terry's contribution margin ratio? Begin by identifying the formula to compute the contribution margin ratio. Contribution margin Sales revenue = Contribution margin ratio (Enter the ratio as a whole percent.) The contribution margin ratio is 72% Requirement 3. What is the company's breakeven point in sales dollars? (Hint: The contribution margin ratio calculated in Requirement 2 is already weighted by the company's actual sales mix.) Begin by identifying the formula to compute the breakeven point in sales dollars. Fixed expenses Operating Income Contribution margin ratio = Breakeven sales in dollars + (Round your answer up to the nearest whole dollar.) The breakeven point in sales dollars is $ 1,400,000 Requirement 4. Terry's top management is deciding whether to embark on a $190,000 advertising campaign. The marketing firm has projected annual sales volume to increase by 16% as a result of this campaign. Assuming that the projections are correct, what effect would this advertising campaign have on the company's annual operating income? fall If Terry embarks on this advertising campaign, sales revenue and variable costs will will cause the contribution margin to increase by %. However, fixed costs will the advertising by by %, which 180.000 due to rise