Pine Cabinet Company sells cabinets to both residential and commercial customers. The following financial information pertains to the company's business operations:

Sales price per cabinet $ 400

Variable expenses $ 295

Fixed expenses $ 834,074

For the year ended December 31, 2020, Pine Cabinet Company produced and sold the following number of cabinets: 9,945

Required:

1. Calculate the number of cabinets Pine Cabinet Company would need to sell to break even for the 2020 year. (4marks)

2. Calculate the number of cabinets Pine Cabinet Company would need to sell to generate net income of $50,000 for the 2020 year. (4marks)

3. The owner thinks that Pine Cabinet Company could sell 10,050 cabinets if $17,000 is spent on an advertising campaign. Prepare 2 contribution format income statements: one showing the results of last year's operations, and one showing what the results of operations would be if these changes were made. Would you recommend that the company do as the owner suggests? (7marks)