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Mother Goose, Co. has a product, a 3D storybook that allows the reader to be one of the characters in the book, which sells

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Mother Goose, Co. has a product, a 3D storybook that allows the reader to be one of the characters in the book, which sells for $24 per unit. The variable costs are $14 per unit, and fixed costs total $62,000 per year. Mother Goose is wanting to make some decisions about this product and has asked for your help in some analysis. Required: 1. What is the break-even point in units for this product for Mother Goose Co.? 2. What is the total (not per unit) contribution margin at the break-even point? 3. If Mother Goose desires to earn a pre-tax income of $250,000, how many units must it sell? 4. If Mother Goose desires to earn an after-tax income of $190,000, how many units must it sell if the tax rate is 30%? 5. What if Mother Goose plans to increases sales by 10% above the level achieved in part d, and assuming fixed costs remain unchanged, by what dollar amount would after-tax income (net income) be expected to increase? 6. The marketing manager informs management that to increase sales volume by 10%, as considered in part e, they would need to increase advertising by $15,000 per year. How many additional units would have to be sold to maintain the income after tax (as found in part d based on the 10% increase in sales) if advertising is increased by $15,000? 7. If instead of trying to sell more units as in part f, Mother Goose chose to increase the selling price per unit to cover the additional $15,000 in advertising expense, by how much would they have to increase the selling price to still maintain the same after-tax income (as found in e based on the 10% increase in sales).

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