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A. Determine the Break-Even Point in Sales Dollars

Question 141

Essay

  A. Determine the break-even point in sales dollars. B. The sales manager believed the company could increase sales by 1,000 units if advertising expenditures were increased by $15,000. By how much wiil operating income increase or decrease if the advertising is increased as suggested? c. What is the maximum amount the company could pay for advertising if the advertising would increase sales by 1,000 units?
A. Determine the break-even point in sales dollars.
B. The sales manager believed the company could increase sales by 1,000 units if advertising expenditures were increased by $15,000.
By how much wiil operating income increase or decrease if the advertising is increased as suggested?
c. What is the maximum amount the company could pay for advertising if the advertising would increase sales by 1,000 units?

Correct Answer:

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A. $120,000/($20 - $8) = 10,00...

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