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Part 2: CVP Analysis (13 marks) Use this information for Questions 5-8 YYZ Company's contribution format income statement is presented below. The company sells its
Part 2: CVP Analysis (13 marks) Use this information for Questions 5-8 YYZ Company's contribution format income statement is presented below. The company sells its only product for $30 per unit. There were no beginning or ending inventories. Sales $150,000 Variable Expenses ($90,000) Contribution Margin $60,000 Fixed Expenses ($72,000) Operating Income ($12,000) Question 5 2 pts Given the negative Operating Income, should the company close down its operations? Provide Quantitative Support. Question 6 Compute the company's break-even point in units sold and in sales $. 4 pts Question 7 How many units would have to be sold to earn a target operating income of $9,000? 3 pts Question 8 4 pts The sales manager is convinced that a $6,000 increase in the advertising budget would increase total sales by $25,000. Would you do this? (2 marks) At what level of sales increase would you be indifferent to the increased advertising expense? (2 marks)
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