MoveIt, LLC produces longboards for recreational use. It produces a single type of durable longboards. The budgeted profit and loss statement for the coming year with expected sales of 200,000 units is as follows:

Sales $2,000,000

Variable costs 1,400,000

Contribution Margin 600,000

Fixed costs 450,000

Income $ 150,000

1. How many units in sales are required to earn a profit equal to 10% of sales?

2. MoveIt has a projected income tax rate of 40%. How many units in sales are required to reach an after-tax profit of $180,000?

3. Ignoring income taxes, MoveIt is considering a social media advertising campaign that is expected to cost $100,000. Projections are that this advertising will boost sales by 25% from the budget provided. What will the projected profit be for the coming year if the advertising project is undertaken? Would you recommend that the company move forward with this advertising project?