Problem 3-38 (Part Level Submission) Carla Vista Company produces a molded briefcase that is distributed to luggage stores. The following operating data for the current year has been accumulated for planning purposes. Sales price Variable cost of goods sold Variable selling expenses Variable administrative expenses $41.00 13.00 11.60 4.00 Annual fixed expenses Overhead Selling expenses Administrative expenses $14,203,800 2,822,550 5,918,250 Carla Vista can produce 2,731,500 cases a year. The projected net income for the coming year is expected to be $3,277,800. Carla Vista is subject to a 40% income tax rate. During the planning sessions, Carla Vista's managers have been reviewing costs and expenses. They estimate that the company's variable cost of goods sold will increase 15% in the coming year and that fixed administrative expenses will increase by $273,150. All other costs and expenses are expected to remain the same. Carla Vista Company's managers are considering expanding the product line by introducing a leather briefcase. The new briefcase is expected to sell for $91.00; variable costs would amount to $37.00 per briefcase. If Carla Vista introduces the leather briefcase, the company will incur an additional $546,300 per year in advertising costs. Carla Vista's marketing department has estimated that one new leather briefcase would be sold for every four molded briefcases. If managers decide to introduce the new leather briefcase, how many units of each briefcase would be required to break even in the coming year? Cost of goods sold for the molded briefcase is expected to be $14.95 per unit. (For computational purposes round contribution margin per unit to 2 decimal places, e.g. 0.38. Round answers to o decimal places, e.g. 25,000.) Molded Briefcase Leather Briefcase 2195655 435016 Break even units Click If you would like to Show Work for this question: Open Show Work SHOW SOLUTION LINK TO TEXT LINK TO TEXT LINK TO TEXT LINK TO VIDEO Attempts: 2 of 2 used (b) After additional research, Carla Vista's marketing manager believes that if the price of the new leather briefcase drops to $67.00, it will be more attractive to potential customers. She also believes that at that price, the additional advertising cost could be cut to $323,410. These changes would result in sales of one molded briefcase for every three leather briefcases. Based on these circumstances, how many units of each briefcase would be required to break even in the coming year? (For computational purposes round contribution margin per unit to 2 decimal places, e.g. 0.38. Round answers to o decimal places, e.g. 25,000.) Molded Briefcase Leather Briefcase Break even units