Basic CVP Concepts Katayama Company produces a variety of products. One division makes neoprene wetsuits. The division's projected income statement for the coming year is as follows: Sales (65,000 units) $15,600,000 Less: Variable expenses 8,736,000 Contribution margin Less: Fixed expenses Operating income $6,864,000 4,012,000 $2,852,000 Required: 1. Compute the contribution margin per unit, and calculate the break-even point in units. Round unit contribution margin to the nearest cent and break-even point to the nearest whole unit. Unit contribution margin Break-even point units Compute the contribution margin ratio and the break-even point in dollars. Enter the contribution margin ratio as a decimal value rounded to two decimal places, and use this rounded value in the second calculation. Contribution margin ratio Break-even point (rounded to the nearest dollar) 2. The divisional manager has decided to increase the advertising budget by $140,000 and cut the average selling price to $200. These actions will increase sales revenues by $1 million. Will this improve the division's financial situation? Prepare a new income statement to support your answer. In your calculations, round the variable cost ratio to three decimal places.