Original feather friends inc distributes a high-quality

Reference no: EM13598090

Original: Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $24 per unit. Variable costs are $12.00 per unit, and fixed costs total $161,000 per year

Refer to the original data. Assume that the company sold 30,000 units last year. The sales manager is convinced that a 12% reduction in the selling price, combined with a $67,000 increase in advertising, would cause annual sales in units to increase by one-third.

1. Prepare two contribution format income statements, one showing the results of last year's operations and one showing the results of operations if these changes are made.
Last Year: Proposed:

30,000 units 40,000 units
Amount Per Unit Amount Per Unit
Sales ? ? ? ?
Variable expenses ? ? ? ?
Contribution margin ? ? ? ?
Fixed expenses ? ? ? ?
Net operating income ? ? ? ?

Reference no: EM13598090

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