The Central Valley Company is a manufacturing firm that produces and sells a single product. The companys revenues and expenses for the last four months are given below.

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.)

2. Assume that fixed costs are incurred uniformly throughout the year. Compute the annual break-even sales, and the profit if 83,500 units are sold during the year. (Round "Break-even sales" answer to nearest whole number.)

3. Calculate the change in profit if the selling price were reduced by $12.00 each and annual sales were to increase by 8,000 units.

4. Determine the change in profit if the company were to increase advertising by $115,000 and if this were to increase sales by 8,000 units.

Central Valley Company Comparative Income Statement March April 6,500 6,000 $ 773,500 $ 714,000 410, 750 385,560 $362, 750 $ 328, 440 May 7,500 $ 892,500 464,100 $ 428,400 June 9,000 $1,071, 000 546,210 $ 524,790 $ Sales in units Sales revenue Less: Cost of goods sold Gross margin Less: Operating expenses Shipping expense Advertising expense Salaries and commissions Insurance expense Amortization expense Total operating expenses Net income $ 64,500 $ 53,000 $ 68,000 92,500 92,500 92,500 165,300 135,500 169,000 16,500 16,500 16,500 49,500 49,500 49,500 $ 388,300 $ 347,000 $ 395,500 $ (25,550) $ (18,560) $ 32,900 63,500 92,500 166,000 16,500 49,500 388,000 136,790 $ $