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Refer to the original data. Assume that the company sold 24,000 units last year. The sales manager is convinced that a 11% reduction in the selling price, combined with a $31,000 increase in advertising expenditures, would cause annual sales in units to increase by 25%. Prepare two contribution format income statements, one showing the results of last year's operations and one showing what the results of operations would be if these changes were made. (Round "Per Unit" answers to 2 decimal places.)

KLEIN COMPANY

Contribution Margin Income Statement

Last Year		Proposed
	24,000	units		units
	Total	Per Unit	Total	Per Unit
Sales	$600,000	$25.00		$22.80
Variable expenses	357,000	15.00		15.00
Contribution margin	243,000	10.00	0	7.80
Fixed expenses	162,000
Net operating income	$81,000		$0

How do you get the left side of this chart? Are the per unit costs from last year correct? How do you determine proposed units? I am hoping to get a breakdown of the answer so I can better understand the problem. Thanks.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M92640525

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