Problem 12-25 (Algo) CVP analysis-what-if questions; breakeven LO 12-7,12-8,12-9, 12-10 [The following information applies to the questions displayed below.] Marathon Company makes and sells a single product. The current selling price is $19 per unit. Varlable expenses are $11.4 per unit, and fixed expenses total $52,620 per month. (Unless otherwise stated, consider each requirement separately.) Problem 12-25 (Algo) Part f f. 1. Calculate the monthly operating Income (or loss) that would result from a $1 per unit price increase and a $6,000 per month Increase In advertising expenses, both relative to the original data. Assume a sales volume of 7,450 units per month. 2. Is the Increase in advertising expense justlfied by the price Increase? Answer is not complete. Complete this question by entering your answers in the tabs below. Calculate the monthly operating income (or loss) that would result from a $1 per unit price increase and a $6,000 per month increase in advertising expenses, both relative to the original data. Assume a sales volume of 7,450 units per month. Note: Do not round intermediate calculations. Management is considering a change in the sales force compensation plan. Currently each of the firm's two salespeople is pald a salary of $2,500 per month. g. 1. Calculate the monthly operating income (or loss) that would result from changing the compensation plan to a salary of $400 per month, plus a commission of $0.75 per unit, assuming a sales volume of 7,450 units per month. 2. Calculate the monthly operating income (or loss) that would result from changing the compensation plan to a salary of $400 per month, plus a commission of $0.75 per unit, assuming a sales volume of 7,000 units per month. h. 1. Assuming that the sales volume of 7,000 units per month achleved in part g could also be achleved by increasing advertising by $1,000 per month Instead of changing the sales force compensation plan. What would be the operating income or loss? 2. Which strategy would you recommend? Complete this question by entering your answers in the tabs below. 9-1. Calculate the monthly operating income (or loss) that would result from changing the compensation plan to a salary of $400 per month, plus a commission of $0.75 per unit, assuming a sales volume of 7,450 units per month. Note: Do not round intermediate calculations. g-2. Calculate the monthly operating income (or loss) that would result from changing the compensation plan to a salary of $400 per month, plus a commission of $0.75 per unit, assuming a sales volume of 7,000 units per month. Note: Do not round intermediate calculations. Losses should be indicated by a minus sign. h-1. Assuming that the sales volume of 7,000 units per month achieved in part g could also be achieved by increasing advertising by $1,000 per month instead of changing the sales force compensation plan. What would be the operating income or loss? Note: Do not round intermediate calculations. Losses should be indicated by a minus sign
