Kincaid Company sells flags with team logos. Kincaid has fixed costs of $639,600 per year plus variable

Question:

Kincaid Company sells flags with team logos. Kincaid has fixed costs of $639,600 per year plus variable costs of $4.20 per flag. Each flag sells for $12.00.
Requirements
1. Use the equation approach to compute the number of flags Kincaid must sell each year to break even.
2. Use the ratio approach to compute the dollar sales Kincaid needs to earn $32,500 in operating income for 2016. (Round the ratio to two decimal places.)
3. Prepare Kincaid's income statement for the year ended December 31, 2016, for sales of 78,000 flags. (Round your final answers up to the next whole number.)
4. The company is considering an expansion that will increase fixed costs by 17% and variable costs by $0.60 per flag. Compute the new breakeven point in units and in dollars. Should Kincaid undertake the expansion? Give your reasoning. (Round your final answers up to the next whole number.)
Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...