The Tennis Gear Company manufactures and sells premium tennis balls through specialty tennis stores. Last year, the company sold 32,000 tennis balls, with the following financial results last year:

Sales	$1,920,000
Variable costs	($1,152,000)
Fixed costs	($548,000)
Profit before taxes	$220,000
Taxes at 30%	($66,000)
After-tax profit	$154,000

Management expects sales growth to be flat in the coming year with revenues and expenses to remain the same as last year.

The Marketing Proposal

In order to stimulate growth, the Marketing Manager has provided a growth proposal to the CEO. This proposal recommends that the company launches an $80,000 marketing campaign and reduces the price of all products by 10%. The marketing manager projects that this could result in sales volume (number of units) growth of up to 50% from the prior year if the campaign and price reduction are implemented. Analysis indicates that the company has capacity to produce the projected additional units.

Required

-What was the Tennis Gear Companys breakeven point in number of tennis balls last year (ie, before the implementation of the marketing proposal)?

-How many tennis balls would the company have had to sell in the past year to earn $240,000 in after tax profit (ie, before the implementation of the marketing proposal)?

-What would the Tennis Gear Companys new breakeven point be in units if the Marketing Managers proposal is implemented?

-What is the potential profit before tax that the Tennis Gear Company could make if the Marketing managers proposal is implemented and the full projected potential increase in sales volumes is achieved?

-Based on your analysis in the above parts, would you recommend that the CEO approves the Marketing Managers proposal for implementation? Why or why not?