question - PROBLEM 6-21A Basics of CVP Analysis Cost...

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PROBLEM 6-21A: Basics of CVP Analysis; Cost Structure. Due to erratic sales of its sole product-a disposable pocket camera-Markline Company has been experiencing difficulty for some time. The company’s contribution format income statement for the most recent month is given below: Sales (30,000 units x $20.00 per unit) $600,000 Variable expenses 360,000 Contribution margin 240,000 Fixed expenses 250,000 Net operating loss $(10,000) Required: 1. Compute the company’s CM ratio and its break-even point in both units and dollars. 2. The president believes that a $20,000 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in a $90,000 increase in monthly sales. If the president is right, what will be the effect on the company’s monthly net operating income or loss? (Use the incremental approach to prepare your answer.) 3. Refer to the original data. The sales manager is convinced that a 14% reduction in
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question - PROBLEM 6-21A Basics of CVP Analysis Cost...

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