Allen Company sells flags with team logos. Allen has fixed costs of $ 875000 per year plus variable costs of $ 12.50 per flag. Each flag sells for $ 25.00.
1-Use the equation approach to compute the number of flags Allen must sell each year to break even.
2- Prepare Allen's contribution margin income statement for the year ended December 31, 2018, for sales of 61 comma 000 flags. (Round your final answers up to the next whole number.)
3-The company is considering an expansion that will increase fixed costs by 40 % and variable costs by $ 2.50 per flag. Compute the new breakeven point in units and in dollars. Should Allen undertake the expansion?
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