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Use the Following information to answer the following questions:

Ferlinghetti Company's Income Statement

for the most recent year appears below:


Sales /20,000 units)................................................$600,000

Less: Variable expenses.........................................$360,000

Contribution margin.................................................$240,000

Less: Fixed expenses.............................................$242,000

Net Operating loss..................................................$(2,000)


1) How many units does the company need to sell in order to generate net income of $35,000?

2) Refer to the original information in the problem. The sales manager is convinced that a $50,000 expenditure on advertising will increase the company's unit sales by 25% without any other increase in fixed expenses. If the sales manager is correct, by how much would the company's net operating income increase or decrease?

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