Interchange Inc. has a unit selling price of $220. The variable cost per unit was $180, and fixed costs were $80,000. The maximum sales within Interchange Inc.s relevant range are 2,750 units. Interchange Inc. is considering a proposal to spend an additional $30,000 on billboard advertising during the current year in an attempt to increase sales and utilize unused capacity.

a) Construct a cost-volume-profit chart indicating the break-even sales. Verify your answer, using the break-even equation.

b) Using the cost-volume-profit chart prepared in part (a), determine:

i. the income from operations if 2,000 units were sold

ii. the maximum income from operations that could have been realized during the year. Verify your answers using the mathematical approach to cost-volume-profit analysis.