1. Consider a company whose current cost structure generates a contribution margin ratio of 60% on revenue. The current break-even revenue is $1,200,000. By increasing its fixed costs by $90,000 this company can increase its contribution margin ratio to 75%. If the company implements this change the new break-even revenue will be:

2. Martha Manufacturing produces a single product that sells for $90. Variable costs per unit equal $50. The company expects total fixed costs to be $72,000 for the next month at the projected sales level of 3,000 units. In an attempt to improve performance, management is considering a number of alternative actions. Suppose management believes that a $40,000 increase in the monthly advertising expense will have a marked effect on sales. Sales must increase by how much to justify this additional expenditure?