Victor Medical Supply is a retailer of home medical equipment. Last year, Victor's sales revenues totaled $$6,600,000.$ Total expenses were $$2,300,000.$ Of this amount, approximately $$1,320,000$ were variable, while the remainder were fixed. Since Victor's offers thousands of different products, its managers prefer to calculate the breakeven point in terms of sales dollars rather than units.

Read the requirements.

Requirement $1.$ What is Victor's current operating income?

Begin by identifying the formula to compute the operating income.

$=$ Operating income

Requirements

What is Victor's current operating income?

What is Victor's contribution margin ratio?

What is the company's breakeven point in sales dollars? $($Hint: The contribution margin ratio calculated in Requirement $2$ is already weighted by the company's actual sales mix.$)$

Victor's top management is deciding whether to embark on a $$260,000$ advertising campaign. The marketing firm has projected annual sales volume to increase by $15\%$ as a result of this campaign. Assuming that the projections are correct, what effect would this advertising campaign have on the company's annual operating income?