2. The most recent income statement of Whitney Company appears below: Whitney Company Income Statement For the Year ended December 31 Sales (45,000 units at P10 per unit P450,000 Less:Cost of good sold: Direct materials 90,000 78,300 98,500 Direct labor Manufacturing overhead Gross Margin Less: operating expenses Selling expense Variable: Sales commission Shipping Fixed(advertising, salaries Administrative: Variable(biling and other) Fixed (salaries and other) Net operating loss 266,800 183,200 27,000 5,400 32,400 120,000 1,800 48,000 202.200 (P19,000) All variable expenses in the company vary in terms of unit sold, except for sales commissions which are based on peso sales. Variable manufacturing overhead is PO.30 per unit. There are no beginning or ending inventories. Whitney company's plant has a capacity of 75,000 units per year. The company has been at a loss for several years. Management is studying several possible courses of action to determine what should be done to make next year profitable. Required: a. The president is considering two proposals prepared by his staff: 1. For next year, the vice president would like to reduce the unit selling price by 20%. She is certain that this would fill the plant to capacity. 2. For next year, the sales manager would like to reduce the unit selling price by 20%, increase the sales commission to 9% of sales, and increase advertising by Pi00,000. Based on marketing studies, he is confident this would increase unit sales by one-third. Compute the amounts of income, one under the vice president's proposal and the other one under the sales manager's proposal. b. Refer to original data. The president believes it would be a mistake to change the unit selling price. Instead, he wants to use less costly materials, theryby reducing unit costs by PO.70. how many units would have to be sold next year to earn a target profit of P30,200? c. Refer to original data. Whitney company's board of directors believes that the company's problem lies in inadequate promotion. By how much can advertising be increased and still allow the company to earn a target profit of 4.5% on sale of P60,000 units?