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Question 1 (8 marks) The following budgeted information is available for SMJ Corp. (SMJ) for the upcoming year, based on sales of 80,000 units:

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Question 1 (8 marks) The following budgeted information is available for SMJ Corp. (SMJ) for the upcoming year, based on sales of 80,000 units: Variable costs Sales $10,000,000 7,500,000 Contribution margin 2,500,000 1,500,000 Fixed costs Operating income $ 1,000,000 Required: a) Calculate SMJ's break-even point in units. (2 marks) b) Calculate SMJ's margin of safety in units. (1 mark) c) Determine how many more units (above the current volume) must be sold if SMJ wishes to increase operating income to $1,500,000. (2 marks) d) Assume that SMJ has an opportunity to enter a new market that would cost an additional $275,000 in fixed costs but would increase sales by 10%. Determine whether SMJ should enter into this opportunity. (3 marks)

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