12 N3 38 Pro-forma to evaluate financial impact of marketing strategies: At 10,000 units, Total Fixed Costs are $200,000 and Total Variable Costs are $50,000. Costs and profit vary with output. The item currently sells for $38. The company is considering how to double output to 20,000. Option 1 is doing nothing. Option 2 is reducing price to $28. Option 3 is increasing advertising by $50,000. a. Complete the following chart. Assumptions Base Option 1 Option 2 Option 3 Output Units 10,000 20,000 20,000 20,000 Unit Price $38 $38 $28 $38 Variable Costs/Unit Contribution per Unit Proforma Income Statement Total Revenue -Total Variable Costs Gross Profit -Total Fixed Costs Net Profit Analysis Gross Margin Net Profit Margin Break Even Units (Week 5) Margin of Safety (Week 5) b. Describe the relationship between Sales and Variable Costs? Sales and Fixed costs? Sales and Gross Profit? Sales and Net Profit? c. What is the difference between fixed and variable costs