AEK Ltd has prepared its income statement, summarised below, for the year ended 30 June 2025.

The company is evaluating three independent situations and has asked for your assistance.
Required
(a) If the company hires a new salesperson at a salary of $36 000, how much must sales increase in terms of dollars to maintain the company’s current profit.
(b) If sales units increase 25% in the next year and profit increases 50%, would management perform better or worse than expected in terms of profit? Assume that there would be adequate capacity to meet the increased volume without increasing fixed costs. Comment on the variable cost per unit.
(c) If a new marketing method would increase variable expenses (by an amount you should calculate), increase sales units 10%, decrease fixed costs 10%, and increase profit by 20%, what would be the company’s break-even point in terms of dollar sales if it adopts this new method? Assume that the sales price per unit would not be changed. Round your answer to the nearest whole number.

Transcribed Image Text:

Sales revenue (40 000 units) Variable expenses Contribution margin Fixed expenses Profit $256 000 192 000 64 000 40 000 $ 24000