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part 1 FC s/b $100,000 in total. Note that this will affect the rest of the problem

decrease by 4,5 EET units Planning Future Sales: Contribution Margin Approach its Trophy Division. The product, which would feature an alligator , is expected to have P3. BUSINESS APPLICATION All Honors Industries is considering a new product for letic teams. Expected variable unit costs are as follows: direct materials, $18.50; direct labor, $4.25; production supplies, $1.10; selling costs, $2,80; and other, $1.95. Annual fixed costs are depreciation, building, and equipment, $36,000; advertising, $45,000 and other, $11,400. Plans are to sell the product for $55. $51 951 REQUIRED 1. Using the contribution margin approach, compute the number of units the com- pany must sell to (a) break even and (b) earn a profit of $70,224. 2. Using the same data, compute the number of units that must be sold to carn a profit of $139,520 if advertising costs rise by $40,000. 3. Using the original information and sales of 10,000 units, compute the selling price the company must use to make a profit of $131,600. (Hint: Calculate contribution margin per unit first.) 4. According to the vice president of marketing, Flora Albert, the most optimistic annual sales estimate for the product would be 15,000 units, and the highest com petitive selling price the company can charge is $52 per unit. How much more can be spent on fixed advertising costs if the selling price is $52, the variable costs can- not be reduced, and the targeted profit for 15,000 unit sales is $251,000

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