Question 2 (60 points) Memofax, Inc., produces memory enhancement kits for fax machines. Sales have been very erratic with some months showing profits and others showing losses. The company?s income statement for a recent month is summarized below:  (i) Compute the company?s CM ratio and its breakeven in both units and dollars (and be sure to label clearly which is which!)  (ii) The sales manager feels that an $9,000 increase in the monthly advertising budget, and increased sales effort, will increase monthly sales by $50,000. If the sales manager?s estimates are correct, what effect will this have on monthly net income? Be sure to use the incremental approach in preparing your answer. Sales (13,000 units at $20 per unit) $260,000 Less, variable expenses 195,000 Contribution margin 65,000 Less fixed expenses 70,000 Net operating loss $(5,000)
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