Exhibit
Using the information in Perform Actives income statement above Exhibit as a starting
point, calculate the following amounts:
a What is Perform Actives breakeven point in units and dollars before any of the above
changes take place ie given the sale price and cost structure indicated in Exhibit
b What was Perform Actives margin of safety in units and dollars in the year ending January
Calculate the margin of safety in percentage?
c How much would net operating income decrease if Perform Active did nothing to recover the increase in cost of goods sold, and if all other costs and the selling price remain the same?
d How many units would Perform Active need to sell to make the same amount of net operating income as in the year ended January if it did nothing to recover the increase in cost of goods sold, and if all other costs and the selling price remain the same?
e Determine the expected operating income under each proposed marketing plan.
