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T TT Company's most recent contribution format income statement is presented below: Sales $75,000 Less variable expenses 45,000 Contribution margin 30,000 Less fixed expenses 36,000
TTTCompany's most recent contribution format income statement is presented below:
Sales | $75,000 |
Less variable expenses | 45,000 |
Contribution margin | 30,000 |
Less fixed expenses | 36,000 |
Net loss | ($6,000) |
The company sells its only product for $15 per unit. There were no beginning or ending inventories.
You are required to the following calculations for the management of the company:
i)Compute the company's break-even point in units sold.
ii)Compute the total variable expenses at the break-even point.
iii)How many units would have to be sold to earn a target profit of $9,000?
iv)The sales manager is convinced that a $6,000 increase in the advertising budget would increase total sales by $25,000. Would you advise the increased advertising outlay?
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