Silicon Cards makes a high-capacity memory card, ThumbDrive, for use in electronic

equipment. Silicon's owner, Monique Mejia, started the company because she believed thatmemory cards would gain widespread acceptance. Monique believed the demand for

portable electronics would increase and, in turn, stimulate the demand for memory cards.

During the upcoming year 2018, Silicon expects to sell 450,000 units of memory cards at

an average selling price of $30 per card. Silicon's variable cost is $18 per card, and its

annual fixed costs equal $4,800,000.

Required: (Consider each situation independently by referring back to the original data)

a. Using equation method, calculate the number of cards Silicon needs to sell to reach breakeven? What would be Silicon's sales revenue at breakeven?

b. Monique has decided that she must earn at least $150,000 in order to compensate her time and

effort. What should be the amount of sales revenue Silicon must generate in order to earn this level

of target profit?

c. What is Silicon's margin of safety (in sales dollar) and margin of safety in percentage?

d. What would be the company's degree of operating leverage with expected operation?

If sales increases by 20%, what would be the percentage change in net income using the degree of operating leverage? Prove your finding by preparing a new contribution format statement..

e. Silicon's Marketing Manager is requesting a 10% price cut combined with an increase in $750,000 of promotional cost. What would be Silicon's new breakeven sales revenue? Let's assume that the Marketing Manager believes sales will increase by 100,000 memory cards if Silicon approves these

changes. By how much will Silicon's profit increase or decrease due to the advertising?