Question 4 - 20 marks Tri-cycle Inc., a manufacturer of bicycles, tricycles and biking equipment and has launched a new product, an electronic tricycle. Based on market research there is demand for the product. However, the CFO is worried about the long-term profitability of the product due to the high amount of technology involved in manufacturing the product. The CFO has provided you with the following information and has asked you to analyze some data. The company plans to launch a new advertising campaign next year to promote the new product and is also estimating an increase in direct material costs due to a chip shortage. The CFO has provided you with the following data: Selling price per unit $750.00 Variable costs per electronic tricycle: Direct materials $250.25 Direct labor $150.00 Fixed costs: Manufacturing $82,500 Advertising $165,000 Rent $75,000 Administrative $30,000 Expected sales (units) 1 ,325 Expected changes next year: Increase in direct materials New advertising campaign on fox 2.95% on for $120,000 D Increase in sales units 4.00% Required: 1. Determine the breakeven point in sales dollars and units for the current year. 2. Determine the contribution margin and projected operating profit for the year. upnext 3. Prepare a contribution margin income statement with the expected changes for next year. 4. Given the results you obtained in requirement 3 above, should the company continue producing this product? Why or why not? Reminder: CLEARLY LABEL/NUMBER YOUR ANSWER IN THE BOOKLET PROVIDED. Do not write on this paper (it will not be marked). Page 8 of 9