Martin Footwear Co. produces high-quality shoes. To prepare for next years marketing campaign, the companys controller has prepared the following information for the current year, 2020:

Variable costs (per pair of shoes)
	Direct materials		$39.00
	Direct manufacturing labour		18.00
	Variable overhead (manufacturing, marketing, distribution, customer service, and administration)		23.00
	Total variable costs		$80.00
Fixed costs
	Manufacturing		$2,640,000
	Marketing, distribution, and customer service		455,000
	Administrative		785,000
	Total fixed costs		$3,880,000

Selling price per pair of shoes		$180
Expected revenues, 2020 (50,300 units)		$9,054,000
Income tax rate		40%

A) Calculate the projected operating income before tax for 2020.

Operating income before tax

$ 1150000

B)

Calculate the break-even point in units for 2020.

Break-even point

units

: 38800

C)The company controller has set the revenue target for 2021 at $10,062,000 (or 55,900 pairs). He believes an additional marketing cost of $446,000 for advertising in 2021, with all other costs remaining constant, will be necessary to attain the revenue target. Calculate the operating income for 2021 if the additional $446,000 is spent and the revenue target is met.

Operating income

$