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Part A-(14 marks) Sports Corporation produces the magical brand of basketballs. Sales have been very erratic, with some months showing a profit and some months
Part A-(14 marks) Sports Corporation produces the magical brand of basketballs. Sales have been very erratic, with some months showing a profit and some months showing a loss. The company's contribution format income statement for the most recent month is given below: $270,000 189,000 81,000 90,000 $(9,000) Fixed e Required: 1. Compute the company's contribution margin (CM) ratio. (4 marks) (6 marks) 3. The sales manager feels that an $8,000 increase in the monthly advertising budget, 2. Compute the company's break-even point in both units and dollars. combined with an intensified effort by the sales staff, will result in a $70,000 increase in monthly sales. If the sales manager is right, what will be the effect on the company's monthy net operating income or loss? (4 marks)
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