Can you Anser these two questions and show the workings how the figures are calculated.

d) What is the breakeven point in revenues for 2017 if the additional $11,250 is spent for advertising? (1 Marks)

e) At a sales level of 22,000 units, what maximim amount can be spent on advertising if a 2017 nt income of $60,000 is desired? (1 Marks)

The UConn Company, a manufacturer of quality handmade wallets, has had a steady growth in sales for the past five years. However, increase competition has led Mr. Rosario, the president, to believe that an aggressive marketing campaign will be necessary next year to maintain the companys growth. To prepare for the next years marketing campaign; the companys controller has prepared and presented Mr. Rosario with the following data for the current year 2016:

Variable cost (per wallet)

Direct materials 3.25

Direct manufacturing labour 8

Variable overhead 2.5

Total variable cost 13.75

Selling price 25.00

Expected sales, 20,000 units $500,000.00

Income tax rate 40.00%

Required:

a) What is the projected net income for 2016? (1 Marks)

b) What is the breakevn point in units for 2016? (1 Marks)

c) Mr. Rosario has set the revenue target for 2017 at a level of $550,000 (or 22,000 wallets). He believes an additional marketing cost of $11,250 for advertising in 2017, with all other costs remaining constant, will be necessary to attain the revenue target. What is the net income for 2017 if the additional $11,250 is spent and the revenue target is met? (1 Marks)

d) What is the breakeven point in revenues for 2017 if the additional $11,250 is spent for advertising? (1 Marks)

e) At a sales level of 22,000 units, what maximim amount can be spent on advertising if a 2017 nt income of $60,000 is desired? (1 Marks)