Happy Corporation makes a product that sells for $200 per unit. The variable costs to make this product are $120 per unit. The fixed costs total $500,000 for a year. Happy currently sells 7,500 units each year.
A. Calculate the number of units that Happy must sell to break even.
B. Calculate the number of units that Happy must sell to make $200,000 in profit.
C. Happy estimates that $40,000 of radio advertising could increase the company's sales by 10%. Should the company purchase the radio ads? (Use the original cost data to answer this question)