Question: (link Back To Main Parel Breakeven; Operating Leverage Brindle Arts, Inc. Sells Artwork And Has The Following Income Statement For Quarter 3, 2020: Brindle Arts, Inc. Contribution Income Statement For Quarter 3, 2020 Total Per Unit % Of Sales $ $ Sales (10,500 Pieces) Variable Expenses Contribution Margin Fixed Expenses 2,100,000 1,260,000 840,000 550,000 …

(link back to main parel Breakeven; Operating Leverage Brindle Arts, Inc. sells artwork and has the following income statement for Quarter 3, 2020: Brindle Arts, Inc. Contribution Income Statement For Quarter 3, 2020 Total Per unit % of Sales $ $ Sales (10,500 pieces) Variable expenses Contribution Margin Fixed Expenses 2,100,000 1,260,000 840,000 550,000 $ $ Net Operating Income $ 290,000 Brindle Arts, Inc. sold 10,500 pieces of art in Quarter 3. Complete the table above to find Contribution Margin per unit and Contribution Margin ratio. pieces of art sold in Quarter 3 10,500 Calculate Breakeven sales in units and dollars. pieces of art (<-- answer (<-- answer) Calculate the required sales in units and dollars for Brindle Arts, Inc. to reach $500,000 profit in Quarter 4. desired profit = $ 500,000 pieces of art (<-- answer) (<-- answer) Verify the target profit amounts by filling in the income statement below. Brindle Arts, Inc. Contribution Income Statement To verify target profit calculations Total Per unit % of Sales Sales (?? pieces) Variable expenses Contribution Margin Fixed Expenses Net Operating Income Calculate the margin of safety using Quarter 4 target sales. Margin of safety = Target/Actual sales - Breakeven Sales Margin of Safety pieces of art (<-- answer) Margin of Safety (<-- answer) Refer to the current sales values at the top. Calculate the current Operating Leverage for Brindle Arts, Inc. Operating Leverage (<-- answer) Brindle Arts, Inc. is thinking about running a new advertising campaign next quarter that should increase sales by 10%. The cost of the advertising would be $50,000. What would Brindle's NOI be next quarter as a result of the advertising? cost of advertising = $ 50,000 Sales change (%) = 10% New NOI (<-- answer) Should Brindle move forward with the advertising campaign? Why/why not? Instead of advertising, Brindle is also considering a new processing system that will improve productivity and reduce variable expenses by 25%. The cost of this system would be $250,000. Create an updated income statement to show the outcome of this upgrade and calculate the new breakeven sales Brindle can expect. (Hint: use values from the very top AND unit sales aren't changing) Brindle Arts, Inc. Contribution Income Statement For updated processing system Total Per unit % of Sales Sales (10,500 pieces) Variable expenses Contribution Margin Fixed Expenses Net Operating Income projected pieces of art sold next quarter 10,500 pieces of art (<-- answer) (<-- answer) Should Brindle upgrade to the new processing system? Why/ why not?