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Fry Corporation developed the following income statement using a contribution margin approach: Sales (12,000 units) Less variable costs: Fry Company Projected Income Statement Variable
Fry Corporation developed the following income statement using a contribution margin approach: Sales (12,000 units) Less variable costs: Fry Company Projected Income Statement Variable manufacturing costs Variable selling costs Total variable costs Contribution margin Less fixed costs: For the Current Year $60,000 $240,000 36,000 96,000 $144,000 Fixed manufacturing costs Fixed selling and administrative costs Total fixed costs Operating income Required: A. Determine the break-even point in sales dollars. $ $85,000 35,000 120,000 $24,000 B. The sales manager believed the company could increase sales by 1,000 units if advertising expenditures were increased by $15,000. By how much will the operating income increase or decrease if the advertising is increased as suggested? C. What is the maximum amount the company could pay for advertising if the advertising would increase sales by 1,000 units?
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