Requirement 4.

PeterPeter's

top management is deciding whether to embark on a

$ 250 comma 000$250,000

advertising campaign. The marketing firm has projected annual sales volume to increase by

1010%

as a result of this campaign. Assuming that the projections are correct, what effect would this advertising campaign have on the company's annual operating income?

If Peter embarks on this advertising campaign, sales revenue and variable costs will						by		%, which
will cause the contribution margin to		by		%. However, fixed costs will		by $		due to
the advertising.

Score: 3.68 of 7 pts 3 of 5 (3 complete) HW Score: 29.61%, 8.88 of 30 % E7-33A (similar to) Question Help Peter Medical Supply is a retailer of home medical equipment. Last year, Peter's sales revenues totaled $6,000,000. Total expenses were $2,100,000. Of this amount, approximately $1,500,000 were variable, while the remainder were fixed. Since Peter's offers thousands different products, its managers prefer to calculate the breakeven point in terms of sales dollars rather than units. Read the requirements. Contribution margin Sales revenue = Contribution margin ratio (Enter the ratio as a whole percent.) The contribution margin ratio is 75 % Requirement 3. What is the company's breakeven point in sales dollars? (Hint: The contribution margin ratio calculated in Requirement 2 is already weighted by the company's actual sales mix.) Begin by identifying the formula to compute the breakeven point in sales dollars. ( Fixed expenses + Operating income / Contribution margin ratio = Breakeven sales in dollars (Round your answer up to the nearest whole dollar.) The breakeven point in sales dollars is $ 800,000 Requirement 4. Peter's top management is deciding whether to embark on a $250,000 advertising campaign. The marketing firm has projected annual sales volume to increase by 10% as a result of this campaign. Assuming that the projections are correct, what effect would this advertising campaign have on the company's annual operating income? O If Peter embarks on this advertising campaign, sales revenue and variable costs will will cause the contribution margin to by %. However, fixed costs will the advertising by 5 by $ %, which due to Choose from any list or enter any number in the input fields and then click Check