Part A. (9 points)

Huels & Sons Inc. manufactures fishing products. The company hired you as its senior financial analyst. The COO, Dr. Huels provided you the following financial data:

Sales $500,000

Variable costs $100,000

Fixed costs $200,000

He asked you to report back to him regarding the following questions:

1) What is the contribution margin ratio?

2) What is the level of sales in dollars necessary to generate a profit of $40,000?

3) What is the contribution margin ratio if the sales price is increased by 10%?

4) Using the information in part 3, what level of sales in dollars is necessary to generate a profit of $40,000?