Thomas Company has total fixed costs of $360,000 and variable costs of $14 per unit. If the unit sales price is reduced from $24 to $20 and advertising is increased by $10,000, sales will increase from 40,000 to 65,000 units.

What are the contribution margin and net income under the revised conditions?

1. $650,000 and $280,000 respectively.
2. $400,000 and $40,000 respectively.
3. $280,000 and $40,000 respectively.
4. $390,000 and $20,000 respectively.
5. $400,000 and $20,000 respectively.