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Data concerning Face Masks Corporation' s single product appear below: Details Per Unit Percent of Sales Selling Price 180$ 100% Variable Expense 144 80% Contribution

Data concerning Face Masks Corporation's single product appear below:

Details

Per Unit

Percent of Sales

Selling Price

180$

100%

Variable Expense

144

80%

Contribution Margin

36

20%

Fixed expenses are $162,000 per month. The company is currently selling 3,000 units per month. Required: The marketing manager believes that a $10,000 increase in the monthly advertising budget would result in a 480 unit increase in monthly sales.

  1. What should be the overall effect on the company's monthly net operating income of this change? Show your computations!
  2. What is the breakeven point in dollars and in units if we accept the marketing manager proposal?

Requirement 1:

Details

Before marketing manager proposal

After marketing manager proposal

Sales

Variable expenses

Contribution margin

Fixed expenses

Net income

Decision

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