Campbell Corporation developed the following income statement using a contribution margin approach:
The projected income statement was based on sales of 100,000 units.Thomas has the capacity to produce 120,000 units during the year.
A. Determine the break-even point in units.
B.The sales manager believes the company could increase sales by 8,000 units if
advertising expenditures were increased by $\$ 22,000$. By how much will income increase or decrease if this plan is put into effect?
C. What is the maximum amount the company could pay for advertising if the sales would really increase by 8,000 units?

Question

Campbell Corporation developed the following income statement using a contribution margin approach:
The projected income statement was based on sales of 100,000 units.Thomas has the capacity to produce 120,000 units during the year.
  A.  Determine the break-even point in units.
B.The sales manager believes the company could increase sales by 8,000 units if
 advertising expenditures were increased by $\$ 22,000$. By how much will income increase or decrease if this plan is put into effect?
C. What is the maximum amount the company could pay for advertising if the sales would really increase by 8,000 units?

Quizplus · Accepted Answer

The Answer of Campbell Corporation developed the following income statement using a contribution margin approach:
The projected income statement was based on sales of 100,000 units.Thomas has the capacity to produce 120,000 units during the year.
  A.  Determine the break-even point in units.
B.The sales manager believes the company could increase sales by 8,000 units if
 advertising expenditures were increased by $\$ 22,000$. By how much will income increase or decrease if this plan is put into effect?
C. What is the maximum amount the company could pay for advertising if the sales would really increase by 8,000 units?

Campbell Corporation Developed the Following Income Statement Using a Contribution $22,000\$ 22,000$22,000

Campbell Corporation Developed the Following Income Statement Using a Contribution $\$ 22,000$