Loren Company's single product has a selling price of $15 per unit. Last year the company reported variable expenses per unit of $9, fixed expenses of $90,000, and a net operating income of $30,000.

Required:

1. Compute the number of unit sales to achieve the mentioned net operating income ($30,000).
2. A study by the sales manager discloses that a 10,000 increase in the advertising costs (fixed costs) would increase unit sales by 10%. If her proposal is adopted, what is the new net operating income?
3. If you are the financial manager on the same company, which scenario (1 or 2) you prefer to adopt and why?