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2 The Central Valley Company is a manufacturing firm that produces and sells a single product. The company's revenues and expenses for the last four months are given below. Central Valley Company Comparative Income Statement March April May June Sales in units 6,100 5,600 6,900 8,200 Sales revenue $ 756, 400 $ 694, 400 $ 855, 600 $1, 016, BOO Less: Cost of goods sold 400, 150 374,976 444,912 518,568 Gross margin $ 356, 250 $ 319, 424 $ 410, 688 498,232 Less: Operating expenses Shipping expense $ 63,700 $ 53,800 $ 67,200 $ 65,500 Advertising expense 86,500 86,500 86,500 86, 500 Salaries and commissions 164, 100 137,500 167,000 176,000 Insurance expense 14,500 14,500 14,500 14,500 Amortization expense 47,500 47,500 47,500 47,500 Total operating expenses $ 376, 300 $ 339, 800 $ 382 , 700 $ 390, 000 Net income $ (20, 050) $ (20,376) $ 27,988 $ 108,232 Required: 1. Management is concerned about the losses experienced during the spring and would like to know more about the cost behaviour. Develop a cost equation for each of the costs. (Do not round intermediate calculations. Round "Per Unit" answers to 2 decimal places.) x Answer is complete but not entirely correct. Cost of goods sold $ 63,841 8 + $ 55.23 per unit Shipping 28,600 S 4.50 per unit Salaries & commission 64,827 X + S 14.81 per unit 2. Assume that fixed costs are incurred uniformly throughout the year. Compute the annual break-even sales, and the profit if 77,500 units are sold during the year. (Round "Break-even sales" answer to nearest whole number.) X Answer is complete but not entirely correct. Break-even sales 63,261 x units Annual profit (77,500 units) 73,773 x 3. Calculate the change in profit if the selling price were reduced by $10.00 each and annual sales were to increase by 7,200 units. x Answer is not complete. Decrease in profit 4. Determine the change in profit if the company were to increase advertising by $111,000 and if this were to increase sales by 7,200 units. 4. Determine the change in profit if the company were to increase advertising by $111,000 and if this were to increase sales by 7,200 units. & Answer is not complete. Incremental profit