R. A. Ro and Company, a manufacturer of quality handmade walnut bowls, has had a steady growth in sales for the past five years. However, increase competition has led Mr. Ro, the president, to believe that an aggressive marketing campaign will be necessary next year to maintain the company's growth. To prepare for next year's marketing campaign, the company's controller has prepared and presented Mr. Ro. with the following data for the current year 2016:

Variable cost (per bowl)

Direct materials

3.25

Direct manufacturing labour

8.00

Variable overhead

2.50

Total variable cost per bowl

13.75

Fixed costs Manufacturing

25,000

Marketing, distribution, and customer service

110,000

Total fixed costs

135,000

Selling price 25.00 Expected sales, 20,000 units Income tax rate 40%

(a) What is the projected net income for 2016?

(b)What is the breakeven point in units for 2016

(c)Mr. Ro. has set the revenue target for 2017 at a level of $550,000 (or 22,000 bowls). He believes an additional marketing cost of $11,250 for advertising in 2017, with all other costs remaining constant, will be necessary to attain the revenue target. What is the net income for 2017 if the additional $11,250 is spent and the revenue target is met?

What is the breakeven point in revenues for 2017 if the additional $11,250 is spent for advertising?