QUESTION 1 (15 marks) The 4 x 4 Shop is a large retailer of equipment for pickup trucks. An income statement for the company's bed liner department for the most recent quarter is presented below: 4 x 4 Shop Income Statement - Liner Department For the First Quarter of the Current Year $700,000 250,000 450,000 Sales revenue (2,000 liners). Cost of goods sold........ Gross profit Selling and administrative expenses: Selling expenses Administrative expenses Profit before tax Income tax (40%) Net profit/income $195,000 145,000 340,000 $110,000 44,000 $66,000 The liners sell, on average, for $350 each. The department's variable selling expenses and administrative expenses are $35 and $18.125 per liner sold. The fixed selling expenses and administrative expenses are $125,000 and $108,750 respectively. The company purchases its liners from a supplier at a cost of $125 per liner, which is considered variable expense. Required: a) s) (2 marks) b) (2 marks) (2 marks) of (3 marks) e) What is the dollar level of sales necessary to attain an after-tax profit of $120,000? (3 marks) If the company increases fixed selling expenses by $10,000 and variable selling expenses by $5 per unit, unit sales are expected to increase by 10% (200 units). Calculate the company's after-tax profit if these changes were to occur, assuming the same tax rate of 40% and unit selling price of $350). (3 marks) f)