Managerial Accounting Chapter 19 Exam Last year Interchange Inc. had sales of $495,000, based on a unit selling price of $225. The variable cost per unit was $175, and fixed costs were $105,000. The maximum sales within Interchange Inc.'s relevant range are 2,750 units. This year Interchange Inc. spent an additional $37,750 on billboard advertising to increase sales and utilize unused capacity. a. Illustrate a cost-volume-profit chart indicating the break-even sales for last year. Verify your answer using both the break-even sales units and dollars equations. Show your work. b. Based on last year's activity determine: (Use the chart in (a) to check your answers) the income from operations for last year and i. ii. the maximum income from operations that could have been realized during the year. Verify your answers using the mathematical approach to cost-volume-profit analysis. C. Illustrate a cost-volume-profit chart indicating the break-even sales for the current year, assuming that a noncancellable contract is signed for the additional billboard advertising. No changes are expected in the unit selling price or other costs. Verify your answer using both the break-even sales units and dollars equations. Show your work. d. Based on this year's activity determine: (Use the chart in (c) to check your answers) i. the income from operations if sales total 2,500 units and ii. the maximum income from operations that could be realized during the year if the additional advertising increases the relevant range to 3,100. Verify your answers using the mathematical approach to cost-volume-profit analysis. e. Was the additional advertising expense worth it? Explain your reasoning.