Green Acres is a lawn care service. Rachel Webb, the owner of the service, is trying to increase her number of regular customers. She has developed several proposals and is trying to decide which one to choose. Following is an income statement for the current year prepared using variable costing:

Prepare a new income statement under each of the following independent conditions:

a. Rachel increases her fixed advertising budget by \(\$ 2,000\) and sales increase by \(10 \%\).

b. Rachel reduces the selling price by \(\$ 5\) per job, and volume increases \(50 \%\).

c. Rachel reduces the selling price \(\$ 3\) per job, reduces fixed costs \(8 \%\), and volume increases to 2,500 jobs.

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Green Acres Income Statement Revenue Total $80,000 Per Job $40.00 Less variable costs: Variable product costs $15,000 7.50 Variable selling and administrative expenses 20,000 35.000 10.00 Contribution margin $45,000 $22.50 Less fixed costs: Fixed product costs $10,000 Fixed selling and administrative expenses 6.000 16,000 Net income $29,000