Currently, the NBA Company sells 600 units of its product, NETS, per year with a $500 selling price. Variable Expenses for the financial period were $180,000. Fixed Expenses for the financial period totaled $100,000. The management of the company believes that they can double the selling price and sell 50% more units if they spend $50,000 more in advertising.

1. Construct a Contribution Margin Statement for both the current and proposed scenario. Determine if managements initiative should be implemented. Be specific as to your basis for your recommendation.

2. Determine the break-even point in units under the proposed management initiative.

3. Determine the break-even point in sales dollars under the proposed management

initiative.

4. Calculate the Degree of Operating Leverage for the new management initiative.