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Ginger Corporation Projected Income Statement For the Current Year Ending December 31 Sales Less variable costs: Variable manufacturing costs $280,000 Variable selling costs 120,000 Total
Ginger Corporation Projected Income Statement For the Current Year Ending December 31 Sales Less variable costs: Variable manufacturing costs $280,000 Variable selling costs 120,000 Total variable costs Contribution margin Less fixed costs: $750,000 $400,000 $350,000 Fixed manufacturing costs $130,000 Fixed selling and administrative costs 80,000 Total fixed costs $210,000 Operating income $140,000 Total fixed costs Operating income $210,000 $140,000 The projected income statement was based on sales of 100,000 units. Ginger has the capacity to produce 120,000 units during the year. Required: A. Determine the break-even point in units. B. The sales manager believes the company could increase sales by 7,000 units if advertising expenditures were increased by $18,000. By how much will income increase or decrease if this plan is put into effect? C. What is the maximum amount the company could pay for advertising if the sales would really increase by 7,000 units
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