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Profit Analysis Rodeo Manufacturers has been experiencing increased competition and the company's CEO is considering increasing marketing efforts to maintain the company's growth. The


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Profit Analysis Rodeo Manufacturers has been experiencing increased competition and the company's CEO is considering increasing marketing efforts to maintain the company's growth. The company's accountant has prepared the following financial information on the price and the costs related to the single product made by the company. Selling price Variable cost per unit $25 $15 Fixed costs $135,000 Tax rate 40% Sales in 2021 20,000 units Sales target for 2021 22,000 units Required: a) Determine the after-tax operating income expected in 2021. advertising. [6 Marks] b) the company's contribution margin ratio if yariable cost increase by 20% of the selling price. [2 Marks] c) the break-even point in dollar sales for 2021 assuming that the additional $10,000 is spent on [3 Marks] d) According to the CEO, an additional expense of $15,000 for advertising in 2021 (all other costs remain unchanged) will be necessary to achieve the sales target. Calculate the change in after-tax operating income assuming that an additional $15,000 is spent. [4 Marks]

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