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    Budgeted Contribution Income Statement

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    Please advise me on how to do the following problem:

    If a new division is created in a company (see attached for financials) then the headcount and related costs for this new division (research and development, sales and marketing) are projected to amount to $4.5 million. Using this and the data provided, prepare the budgeted contribution income statement for just this division. Do you recommend moving forward on the project based on the expected annual unit sales in the 1st year: 72,500 at a price point of $122 per unit if COGS are expected to be $50 per unit?

    What sales level is necessary to enable the new division to break even, and what is the safety margin in revenue $ and units (based on planned units in Year 1)

    Note: the companyâ??s fiscal year ends 12/30/10


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