Due to the sluggish economy, the Iguodala Company has experienced some difficulty in selling its bicycles. The following data relate to the current year:

Sales (9,000 Units @ $100/unit)	$900,000
Less variable costs (9,000 @ $60/unit)	$540,000
Contribution margin	$360,000
Less fixed costs	$400,000
Net operating loss	($40,000)

a. Compute Iguodalas annual breakeven point, in both units and dollars. Also, compute the contribution margin ratio.

b. The manager believes that a $40,000 increase in advertising would result in a $120,000 increase in annual sales. If the manager is right, what will be the net effect on the company's operating income?

c. Refer to the original data. The vice-president in charge of sales is certain that a 10% reduction in selling price in combination with a $30,000 increase in advertising will cause sales volume to increases by 50%. What effect would this strategy have on operating income of the company?

d. Refer to the original data. In the following year, Iguodala saved $5 of total variable costs per bicycle by buying parts from a different manufacturer. However, Iguodalas rent and insurance increased by $5,600. The store sold 11,000 bikes. What was its operating income for the year?