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Morton Company's contribution format income statement for last month is given below: Sales (40,000 units x $24 per unit) $ 960,000 Variable expenses 672,000 Contribution
Morton Company's contribution format income statement for last month is given below: Sales (40,000 units x $24 per unit) $ 960,000 Variable expenses 672,000 Contribution margin 288,000 Fixed expenses 230,400 Net operating income $ 57,600 The industry in which Morton Company operates is quite sensitive to cyclical movements in the economy. Thus, profits vary considerably from year to year according to general economic conditions. The company has a large amount of unused capacity and is studying ways of improving profits. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Refer to the original data. Rather than purchase new equipment, the marketing manager argues that the company's marketing strategy should be changed. Rather than pay sales commissions, which are currently included in variable expenses, the company would pay salespersons fixed salaries and would invest heavily in advertising. The marketing manager claims this new approach would increase unit sales by 30% without any change in selling price; the company's new monthly fixed expenses would be $430,080; and its net operating income would increase by 20%. Compute the company's break-even point in dollar sales under the new marketing strategy. (Hint: figure out the new variable cost per unit by preparing the new contribution format income statement.) (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.) New break even point in dollar sales $ 7,765,333 ( < Required 3 Required 4 > Show less
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