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Sports Specialty Products, Inc. manufactures and distributes various sports memorabilia products. A contribution income statement is given below: Total Per Unit Sales $750,000 $3.75 Variable
Sports Specialty Products, Inc. manufactures and distributes various sports memorabilia products. A contribution income statement is given below: Total Per Unit Sales $750,000 $3.75 Variable Expenses $450,000 $2.25 Contribution Margin $300,000 $1.50 Fixed Expenses $200,000 Net Operating Income $100,000 Required 1. Calculate Break Even Point in Units and Sales 2. The Sales manager is convinced that a $.25 reduction is selling price will increase sales by 15,000 units. 3. He realizes this will require an increase of $12,000 in advertising costs. Would you recommend this course of action. Why or why not? ***Required Answer in following format*** Sales Variable Expenses Contribution Margin Fixed Expenses Net Operating Income Break Even Point Units Dollars 215,000 Units Sales Variable Expenses Contribution Margin Fixed Expenses Net Operating Income
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