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Memograph, Inc. produces memory enhancement kits for fax machines. Sales have been very erratic, with some months showing a profit and some months showing a
Memograph, Inc. produces memory enhancement kits for fax machines. Sales have been very erratic, with some months showing a profit and some months showing a loss. The company's contribution format income statement for the most recent month is given below: Total Per Unit Sales (13,000 units at $40 per unit) $520,000 $40.00 Less: Variable expenses ( 260,000 20.00 Contribution margin 260,000 20.00 Fixed expenses 290,000 Net operating loss $(30,000) Required: a. Compute the company's break-even point in both units and dollars. b. Refer to the original data. The president is convinced that a 10% reduction in the selling price, combined with an increase of $31,000 in the monthly advertising budget, will double unit sales. If the president is right, what
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