Famighetti Company's income statement for the most recent year appears below:

Sales (20,000 units). $600,000

Less: Variable expenses.360,000

Contribution margin 240,000

Less: Fixed expenses..242,000

Net operating loss $(2,000)

1) How many units does the company need to sell in order to generate net income of $35,000?

2) Refer to the original information in the problem. The sales manager is convinced that a $50,000 expenditure on advertising will increase the company's unit sales by 25% without any other increase in fixed expenses. If the sales manager is correct, by how much would the company's net operating income increase or decrease?