CVP Analysis; Profit Planning Horton Manufacturing Inc. (HMI) is suffering from the effects of increased local and global competition for its main product, a lawn mower that is sold in discount stores...

CVP Analysis; Profit Planning Horton Manufacturing Inc. (HMI) is suffering from the effects of increased local and global competition for its main product, a lawn mower that is sold in discount stores throughout the United States. The following table shows the results of HMI’s operations for 2019:

Required 1. Compute HMI’s breakeven point in both units and dollars. Also, compute the contribution margin ratio. (Round the number of units up to the next whole number.) 2. What would be the required sales, in units and in dollars, to generate a pretax profit of $30,000? (Round the number of units up to the next whole number) 3. Assume an income tax rate of 40%. What would be the required sales volume, in both units and dollars, to generate an after-tax profit of $30,000? (Round the number of units up to the next whole number.) 4. Prepare a contribution income statement as a check for your calculations in requirement 3. 5. The manager believes that a $60,000 increase in advertising would result in approximately a $200,000 increase in annual sales. If the manager is right, what will be the effect on the company’s operating profit or loss? 6. Refer to the original data. The vice president in charge of sales feels that a 10% reduction in price in combination with a $40,000 increase in advertising will cause unit sales to increases by 25%. What effect would this strategy have on operating profit (loss)? 7. Refer to the original data. During the year, HMI saved $5 of unit variable cost per lawn mower by buying from a different manufacturer. However, changing the plant machinery to accommodate the new part means an additional $50,000 in fixed costs per year. Was this a wise change? Why or why not?