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Allen Company sells flags with team logos$.$ Allen Company has fixed costs of $\backslash (\backslash$$ $320,000\backslash )$ per year plus variable costs of $\backslash (\backslash$$ $8\mathrm{.}00\backslash )$ per flag. Each flag sells for $\backslash (\backslash$$ $16\mathrm{.}00\backslash ).$

Read the requirements.

Requirement $1.$ Use the equation approach to compute the number of flags Allen Company must sell each year to break even.

First, select the formula to compute the required sales in units to break even.

Fixed costs

Net sales revenue

$\backslash (=\backslash )$

Target profit

Contribution margin per unit

Fixed costs

Net sales revenue

Net sales revenue per unit

Variable costs

Requirements

$1.$ Use the equation approach to compute the number of flags Allen Company must sell each year to break even.

$2.$ Use the contribution margin ratio approach to compute the dollar sales Allen Company needs to earn $\backslash (\backslash$$ $40,000\backslash )$ in operating income for the year. $($Round the contribution margin ratio to two decimal places.$)$

$3.$ Prepare Allen Company's contribution margin income statement for the year ended December $31,$ for sales of $35,000$ flags. $($Round your final answers up to the next whole number.$)$

$4.$ The company is considering an expansion that will increase fixed costs by $\backslash (30\backslash \%\backslash )$ and variable costs by $\backslash (\backslash$$ $1\mathrm{.}60\backslash )$ per flag. Compute the new breakeven point in units and in dollars. Should Allen Company undertake the expansion? Give your reasoning. $($Round your final answers up to the next whole number.$)$

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