Question: Ullie Medical Supply is a retailer of home medical equipment

Ullie Medical Supply is a retailer of home medical equipment. Last year, Ullie’s sales reve-nues totaled $ 6,800,000. Total expenses were $ 2,600,000. Of this amount, approximately $ 1,088,000 were variable, while the remainder were fixed. Since Ullie’s offers thousands of different products, its managers prefer to calculate the breakeven point in terms of sales dollars rather than units.

1. What is Ullie’s current operating income?
2. What is Ullie’s contribution margin ratio?
3. What is the company’s breakeven point in sales dollars?
4. Ullie’s top management is deciding whether to embark on a $ 250,000 advertising campaign. The marketing firm has projected annual sales volume to increase by 14% as a result of this campaign. Assuming that the projections are correct, what effect would this advertising campaign have on the company’s annual operating income?

Sale on SolutionInn
  • CreatedAugust 27, 2014
  • Files Included
Post your question