Stuart Corporation sells hammocks; variable costs are $$71$ each, and the hammocks are sold for $$136$ each. Stuart incurs $$450,500$ of fixed operating expenses annually.

Required

a$1.$ Determine the sales volume in units and dollars required to attain a $$63,000$ profit.

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

b$.$ Stuart is considering implementing a quality improvement program. The program will require a $$6$ increase in the variable cost per unit. To inform its customers of the quality improvements, the company plans to spend an additional $$39,200$ for advertising. Assuming that the improvement program will increase sales to a level that is $5,300$ 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.

Complete this question by entering your answers in the tabs below.

Req A$1$

Determine the sales volume in units and dollars required to attain a $$63,000$ profit,

$\backslash$table$[[$Sales volume in units$],[$Sales volume in dollars$]]$