Question

The following information pertains to Trisan Company's budgeted income statement for the month of June 2011​:

Requirements

​(a)	Determine the​ company's breakeven point in both units and dollars.
​(b)	The sales manager believes that a $18,000 increase in the monthly advertising expenses will result in a considerable increase in sales. How much of an increase in sales must result from increased advertising in order to break even on the monthly​ expenditure?
​(c)	The sales manager believes that an advertising expenditure increase of $18,000 coupled with a 15% reduction in the selling price will double the sales quantity. Determine the net income​ (or loss) if these proposed changes are adopted.

The following information pertains to Trisan Company's budgeted income statement for the month of June 2011: (Click the icon to view the budgeted income statement.) Requirements (a) Determine the company's breakeven point in both units and dollars. (b) The sales manager believes that a $18,000 increase in the monthly advertising expenses will result in a considerable increase in sales. How much of an increase in sales must result from increased advertising in order to break even on the monthly expenditure? (c) The sales manager believes that an advertising expenditure increase of $18,000 coupled with a 15% reduction in the selling price will double the sales quantity. Determine the net income (or loss) if these proposed changes are adopted. Data Table Requirement (a) Determine the company's breakeven point in both units and dollars. - X Begin with the breakeven units. First determine the formula, then calculate the breakeven point in units. = Breakeven units Sales (1,900 units @ $200 $ 380,000 152,000 Variable cost Contribution margin Now determine the company's breakeven point in dollars. First determine the formula, then calculate the breakeven point in dollars. 228,000 240,000 = Breakeven dollars Fixed cost Net loss (12,000) Renuirement Ihl Tho cales mananer helieves that a $180 increase in the monthly acharticing evnences will recult in a conciderable inrra adverticing in Print Done Choose from any list or enter any number in the input fields and then continue to the next question.

Answer 1

a. Break Even Point
i	Sales	380000
ii	Variable Cost	152000
iii	Contribution	228,000
iv	Margin %   (iii/ i )*100	60%
v	Fixed Cost	$        240,000
vi	Break Even Point (v/iv)	$        400,000
vii	Break Even Point ( in Units)	2000

b.

i	Contribution Margin	60%
ii	Current Fixed Cost	$        240,000
iii	Proposed Additional Advertisement Cost	$          18,000
iv	Proposed Fixed Cost (ii+iii)	$        258,000
v	Break Even Point (iv/i)	$        430,000
vi	Current Sales	$        380,000
vii	Additional Sales Required (v-vii)	$          50,000

c.

Sales ( 1900 Units)	$        380,000
Variable Cost	$        152,000
Contribution	$        228,000
Selling Price / Unit	$                200
Contribution Margin	60%
Contribution /Unit	$                120
Variable Cost / Unit	$                  80
Proposed decrease in selling price	$                  30
Proposed Selling Price	$                170
Revised Contribution / Unit	$                  90
Revised Contribution for 3800 Units	$        342,000
Fixed Cost	$        258,000
Profit	$          84,000