1. Prepare the company's current contribution margin income statement. 2. Calculate the change in operating income that would result from implementing each of the following independent strategy alternatives. Compare each alternative to the current operating income as you calculated in Requirement 1. Consider each alternative separately. a. Alternative 1: The company believes volume will increase by 20% if salespeople are paid a commission of 5% of the sales price rather than the current $5 per unit. b. Alternative 2: The company believes that spending an additional $2,000 on advertising would increase sales volume by 12%. C. Alternative 3: The company is considering raising the selling price to $94 but believes volume would drop by 24% as a result. d. Alternative 4: The company would like to source the product from domestic suppliers who charge S13 more for each unit. Management believes that the "Made in the USA" label would increase sales volume by 20% and would allow the company to increase the sales price by $6 per unit. In addition, the company would have to spend an additional $1.500 in marketing costs to get the word out to potential customers of this change.

1. Prepare the company's current contribution margin income statement. 2. Calculate the change in operating income that would result from implementing each of the following independent strategy alternatives. Compare each alternative to the current operating income as you calculated in Requirement 1. Consider each alternative separately. a. Alternative 1: The company believes volume will increase by 20% if salespeople are paid a commission of 5% of the sales price rather than the current $5 per unit. b. Alternative 2: The company believes that spending an additional $2,000 on advertising would increase sales volume by 12%. C. Alternative 3: The company is considering raising the selling price to $94 but believes volume would drop by 24% as a result. d. Alternative 4: The company would like to source the product from domestic suppliers who charge S13 more for each unit. Management believes that the "Made in the USA" label would increase sales volume by 20% and would allow the company to increase the sales price by $6 per unit. In addition, the company would have to spend an additional $1.500 in marketing costs to get the word out to potential customers of this change.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter6: Merchandising Transactions

Section: Chapter Questions

Problem 20MC: A multi-step income statement ________. A. separates cost of goods sold from operating expenses B....

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