Stratford Company distributes a lightweight lawn chair that sells for $30 per unit. Variable expenses are $12 per unit, and fixed expenses total $360,000 annually. Results for last year are as follows: Type or paste question here

Sales (29,000 units)	$	870,000
Variable expenses		348,000
Contribution margin		522,000
Fixed expenses		360,000
Operating income	$	162,000

Calculate the companys CM ratio and its break-even point in sales dollars and in units.

If sales increase by $65,000 during the coming year due to increased demand, by how much should operating income increase? Use the incremental approach in preparing your answer.

Refer to the original data. The sales vice-president is convinced that a 10% decrease in the selling price, combined with a $300,000 increase in marketing expenditures, would increase annual unit sales by 70%. Prepare a new contribution format income statement assuming these changes occur.

Should the company proceed with the changes?

Refer to the original data. The president feels that it would be unwise to change the selling price. Instead, she wants to increase the sales commission by $4 per unit. She thinks that this move, combined with some increase in advertising, would increase sales to 58,000 units compared to 29,000 last year. By how much could advertising be increased with profits remaining unchanged? Do not prepare an income statement; use the incremental analysis approach.