Question

Sports Specialty Products, Inc. manufactures and distributes various sports memorabilia products. A contribution income statement is...

Sports Specialty Products, Inc. manufactures and distributes various sports memorabilia
products. A contribution income statement is given below:
Total Per Unit
Sales $750,000 $3.75
Variable Expenses $450,000 $2.25
Contribution Margin $300,000 $1.50
Fixed Expenses $200,000
Net Operating Income $100,000
Required:
1. Calculate Break Even Point in Units and Sales
2. The Sales manager is convinced that a $.25 reduction is selling price will increase sales by 15,000 units.
He realizes this will require an increase of $12,000 in advertising costs. Would you recommend this course of action.  
Why or why not?
Business   Accounting   
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The answer has been presented in the supporting sheet. For detailed answer refer to the supporting sheet.

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