Perez Corporation sells hammocks; variable costs are $$61$ each, and the hammocks are sold for $$144$ each. Perez incurs $$579,400$ of fixed operating expenses annually.

Required

a$1.$ Determine the sales volume in units and dollars required to attain a $$68,000$ profit.

a$2.$ Prepare an income statement using the contribution margin format.

b$.$ Perez is considering implementing a quality improvement program. The program will require a $$9$ increase in the variable cost per unit. To inform its customers of the quality improvements, the company plans to spend an additional $$20,000$ for advertising. Assuming that the improvement program will increase sales to a level that is $5,600$ units above the amount computed in Requirement a$,$ prepare a budgeted income statement using the contribution margin format.

c$.$ Determine the new break$-$even point in units and sales dollars as well as the margin of safety percentage, assuming that the quality improvement program is implemented.