Dunphy Inc. produces three models of a certain product: Standard, Deluxe, and Super. Relevant data:

Standard

Deluxe

Super

Sales in units

12,000

5,000

3,000

Price per unit

85

120

166

Variable cost per unit

34

45

84

Fixed costs are $1,000,000.

a)

Compute Dunphy's breakeven point in sales dollars with the current sales mix.

b)

Compute Dunphy's current margin of safety.

c)

What is forecast net income at sales of $2,400,000 given the current sales mix?

d)

Marketing Department has proposed a sales promotion costing $40,000 with a focus on one model only.

Depending on which model is chosen, the promotion is expected to increase sales of Standard by 11%, Deluxe by 15%, or Super by 20%.

Should the campaign be approved, and if so, which model should it promote? Explain, with relevant calculations.