What will be the new breakeven point if the additional $248,600 is
spent on advertising?
Homework Answers
Total fixed costs = $621,500 + additional advertising expenses 248,600 = $870,100
Unit Contribution Margin = Unit Selling price 85 - unit variable cost 46
= $39
Contribution Margin Ratio = Contribution Margin 39 / unit selling price 85 = 39 / 85
New break even point in units = total fixed costs $870,100 / unit contribution Margin 39
= 22,310.25 units or 22,310 units
New break even point in dollars = total fixed costs 870,100 / CM ratio 39 / 85
= 870,100 * 85 / 39
= $1,896,372
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What will be the new breakeven point if the additional $248,600 is
spent on advertising?
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Connelly Inc., a manufacturer of quality electric ice cream makers, has experienced a steady growth in sales over the past few years. Because her business has grown, Jan De Janey, the president, believes she needs an aggressive advertising campaign next year to maintain the company's growth. To prepare for the growth, the accountant prepared the following data for the current year: $ 23.00 27.50 11.50 $ 62.00 Variable costs per ice cream maker Direct labor Direct materials Variable overhead Total...
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