Zachary Adams has recently been hired as the marketing manager by Luxon Limited.
ID: 2340392 • Letter: Z
Question
Zachary Adams has recently been hired as the marketing manager by Luxon Limited. Adams is convinced that Luxon should launch a major new promotion in August that includes a tie-in with a new movie. For every one of Luxon's products sold, the customer would be given a free ticket to the movie (this is a limited time offer) Luxon's income statement for August, based orn actual sales of 6,000 units, was as follows: Sales revenue Less: Variable costs Contribution margin Less: Fixed costs Profit $480,000 336,000 144,000 105,000 $39,000 Adams has conducted some market research and concluded that the promotion would increase sales by 4,000 units per month. The fixed costs for this promotion would be $2,800 and a movie ticket would cost Luxon $9Explanation / Answer
Breakeven point = contribution / sales = $ 144000 / $ 480000 = 30%
MOS = Sales - BEP Sales / Sales = 480000-144000/480000 = 70%
Company may find it useful to know its BEP because it helps to
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