Marvelly company manufactures and sells dolls. The company plans to manufacture and sell 80,000 units of the dolls for $4,000,000 in 2020 with the following information: The cost for each doll consists of direct material $15, direct labour $10, and variable manufacturing overhead $5. The salaries of the factory manager and supervisors are estimated at $300,000 per annum, depreciation of machinery, factory equipment, and buildings is budgeted at $250,000 per year, and the rental of factory building is $200,000 per year.

1. Calculate the projected operating profit or loss for 2020 financial year

2. Calculate the annual break-even point in units and in sales dollars.

3. Calculate how many units would have to be sold annually to earn a target operating profit after tax of $140,000 if the tax rate is 30%.

4. If sales increase by $50,000 per year and there is no change in sales price, fixed cost and variable expenses, calculate by how much you would expect annual operating profit to increase.

5. Refer to the original data, the consultant recommends to the manager of Marvelly Ltd to run an advertisement to boost its sales. The advertising expense is expected to increase annual sales by 50%. Calculate how much advertising expense will be if the company wants to earn a target operating profit before tax of $900,000.