Chapter 5: Vader Collectibles, Inc. Graded Homework Assignment Fall 2019 When Darth Vader isn't too busy ridding the galaxy of rebel scum, he enjoys running his own business. Vader Collectibles, Inc. Vader Collectibles sells premium quality model Death Stars. The model Death Stars include miniature superlasers with enough power to destroy the four Rebel Trooper action figures that are included with purchase. Unfortunately, Darth Vader isnt as good at running a business as he is at fighting rebels, and Vader Collectibles, Inc. has never been profitable. Emperor Palpatine, embarrassed that his apprentice can truna profitable business, recently made Darth Vader take a managerial accounting class. Darth Vader is eager to use his new skills to make his business more successful and impress his master Based on what he learned in class, Darth Vader has prepared a contribution margin income statement for his current sales volume of 19,000 units: Sales Variable Expenses Contribution Margin Fixed Expenses Net Operating Income Total $ 1,805,000 1,335,700 469,300 520,000 $ (50,700) Darth Vader believes that if he were to run a fantastic ad campaign, he could sell more units and finally earn a profit. He wants to record a commercial that would show the real Death Star blowing up a planet and then feature Darth Vader himself blowing up various action figures using the model Death Star. Darth Vader estimates that this advertising campaign would cost $25,000 and would generate additional sales of 5,000 units. Requirements: Using the information presented above, perform the following: 1. 2. 3. Expand Darth Vader's contribution margin income statement to include the sales, variable expenses, and contribution margin information on a per-unit and percent of sales basis. Calculate Vader Collectibles' break-even point in unit sales and in dollar sales Prepare a contribution margin income statement that would result from the assumptions Darth Vader is making about his proposed advertising campaign. Calculate Vader Collectibles' required sales in units in order to obtain a target profit. Calculate Vader Collectible's degree of operating leverage Calculate how Vader Collectible's net operating income would change based on a percent change in sales 4. 5. 6