117 119 a The vice president suggests that the seling price be lowered by 10% and advertising be reduced by 50.000.00 119 She is confident that this action will increase sales to 50.000 units 120 121 The new selling price price per unit would be $9.00 122 The new total advertising would be 124 25 126 127 128 120 b. Prepare a new contribution in income statement, using the vice president's recommendation Remember when volume changes inumber of units), 130 total variable costs change proportionateh To get total variable costs, multiply the per unit amounts from Requirement 3 by the new number of units 101 132 Total Unas Amount 60.000 Per Unit 134 195 Sales New from above 136 Variable Costs 137 Direct materials 10 Drect Labor 125 Variable MOH 160 Sales commissions 141 Shipping 102 Variable biling 143 Total Variable Costs 4 Contribution Margin 145 Fred Costs FMOH Advertising New from above 1 Sales and advies 14 Fhed billing 450 Total Fixed Costs 151 Net Operting Income 12 146 14 Requirement : Calou the degree of operating leverage using the vice-president's proposed income statement above 12 decimal places 156 Show World Answer 158 360 GT sales increase by operating income vil increase by Percent Dollars 4 165 16 117 119 a The vice president suggests that the seling price be lowered by 10% and advertising be reduced by 50.000.00 119 She is confident that this action will increase sales to 50.000 units 120 121 The new selling price price per unit would be $9.00 122 The new total advertising would be 124 25 126 127 128 120 b. Prepare a new contribution in income statement, using the vice president's recommendation Remember when volume changes inumber of units), 130 total variable costs change proportionateh To get total variable costs, multiply the per unit amounts from Requirement 3 by the new number of units 101 132 Total Unas Amount 60.000 Per Unit 134 195 Sales New from above 136 Variable Costs 137 Direct materials 10 Drect Labor 125 Variable MOH 160 Sales commissions 141 Shipping 102 Variable biling 143 Total Variable Costs 4 Contribution Margin 145 Fred Costs FMOH Advertising New from above 1 Sales and advies 14 Fhed billing 450 Total Fixed Costs 151 Net Operting Income 12 146 14 Requirement : Calou the degree of operating leverage using the vice-president's proposed income statement above 12 decimal places 156 Show World Answer 158 360 GT sales increase by operating income vil increase by Percent Dollars 4 165 16