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Johnson, Inc. projects sales for next year will be 60,000 units if the sales price is $28. At this level, unit fixed costs will be $8 while total variable costs will be $720,000. The vice president of marketing advises management to reduce sales price to $26 and to undertaken a national advertising campaign costing $10,000.
a, What is the breakeven point for the company in terms of dollars and units before giving effect to the vice president's plan? b. What is the breakeven point in units after giving effect to the plan? c. The vice president believes that his plan will result in a before ta>r earnings of $56,000, How many units must be sold to reach this earnings level? d, Using the graph on the next page, create a Cost-Volume-Profit graph for the Answer to part ft)' Label all parts of the graph and show your work.
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