Part A. (9 points)Huels & Sons Inc. manufactures fishing products. The company hired you as its senior financial analyst. The COO, Dr. Huels provided you the following financial data:Sales$500,000Variable costs$100,000Fixed costs$200,000He asked you to report back to him regarding the following questions:1) What is the contribution margin ratio?2) What is the level of sales in dollars necessary to generate a profit of $40,000?3) What is the contribution margin ratio if the sales price is increased by 10%?4) Using the information in part 3, what level of sales in dollars is necessary to generate a profit of $40,000?Part B. (16 points)Huels & Sons Inc. manufactures fishing products. As the senior financial analyst of the company, you are responsible for prepare the company’s financial statements for internal use. The cost accountant provided you the following estimated financial data for the year 2020:Huels & Sons Inc.Projected Income StatementFor the Year Ending December 31, 2020Sales (12,000 units)$240,000Less variable costs:Variable manufacturing costs$60,000Variable selling costs36,000Total variable costs96,000Contribution margin$144,000Less fixed costs:Fixed manufacturing costs$85,000Fixed selling and administrative costs35,000Total fixed costs120,000Operating income$ 24,000The company’s COO, Dr. Huels asked you to conduct break-even analysis and to provide him information to address the following questions:1) How much sales in terms of dollars are required for the company to break even?2) Dr. Huels believed the company could increase sales by 1,000 units if advertising expenditures were increased by $15,000. By how much will operating income increase or decrease if the advertising is increased as suggested?3) What is the maximum amount the company could pay for advertising if the advertising would increase sales by 1,000 units?4) Prepare an updated projected Contribution Margin Income Statement for Huels & Sons Inc. for year 2020 based on the information and your response Part 3). The key categories for the contribution format statement should include sales, variable expenses, contribution margin, fixed expenses, and net income. Like the lecture items for this Module, please include per item and total amount. The variable costs should be broken down to a level that represents per unit sold.Note: Your submission should be in one PDF file. The Contribution Margin Income Statement is best to be created from Excel worksheet and answers to other questions may be best in WORD. Except for the Contribution Margin Income Statement, please show the steps in your calculation to reach the final answer. In that way, you can earn partial credit for a question if your response is not correct.
Please note that you will need to use the formulas in Module to help answer the questions. For Part B Question 3, the assumption is that the company will maintain its operating income at $24,000.