Problem $1$

The following is the projected income statement for Tara Corporation for the year ended

December $31,2024$:

Tara Corporation

Projected Income Statement

For the Year Ended December $31,2024$

Sales $(20,000$ units$)..$

Less: Variable Costs.

Contribution Margin.

Less: Fixed Costs.

Net Operating Income

Required:

$($a$)$ Determine the contribution margin per unit.

$($b$)$ Determine the contribution margin ratio.

$($c$)$ Determine the variable expense ratio.

$($d$)$ Determine the break$-$even point in units and in sales dollars.

$($e$)$ Determine the number of units necessary to generate a profit of $$210,000.$

$($f$)$ Determine the level of sales in dollars necessary to generate a profit of $$240,000.$

$($g$)$ Determine the margin of safety in sales dollars and as a percentage.

$($h$)$ The sales manager believes the company could increase sales by $5\%$ if advertising

expenditures were increased by $$60,000.$ By how much will operating income increase

or decrease if advertising is increased as suggested?