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Last year Bidwell company had the following data for its only product, Product SD: ...

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Accounting

Last year Bidwell company had the following data for its only product, Product SD:

Fixed Variable

Sales (100,000) $1,000,000

Expenses:

Direct Materials $300,000

Direct Labor 200,000

Manufacturing Overhead $100,000 150,000

Selling and Administrative 110,000 50,000

Total Expenses 210,000 700,000 910,000

Net Operating Income $90,000

The company produced and sold 100,000 units during the year and had no beginning or ending inventories. Suppose management believes that a $15,000 increase in annual advertising expense will result in a considerable increase in sales.

1. Based on last years data, how much would sales revenue have to increase for the company to be economically indifferent between doing the advertising campaign and not doing the advertising campaign?

2. Based on last years data, the number of units of Product SD that Bidwell must sell to breakeven in the coming year is:

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