13 Requirement 5: 14 15 Multiply the lowest digit (other than zero) from the last four digits of you student 10 number by 10,000 and 16 enter for C below. 117 18 a. The vice president suggests that the selling price be lowered by 10% and advertising be reduced by . $ 10,000.00 19 She is confident that this action will increase sales to 60,000 units. 120 21 The new selling price price per unit would be: $9 22 123 The new total advertising would be: $90,000 124 125 126 127 128 129 b. Prepare a new contribution margin Income statement, using the vice president's recommendation. Remember, when volume changes (number of units), 130 total variable costs change proportionately. To get total variable costs, multiply the per unit amounts from Requirement 3 by the new number of units. 131 132 Total Units Amount 133 60,000 Per Unit 134 135 Sales $ 540,000.00 $9 New from above 136 Variable Costs 137 Direct materials 138 Direct Labor 139 Variable MOH 140 Sales commissions 141 Shippine 142 Variable billing 143 Total Variable costs 144 Contribution Margin 145 Fixed Costs 146 Fixed MOH 147 Advertising New from above 148 Sales and admn salaries 149 Fixed billing 5 Sales $ 540,000.00 $9 New from above 5 Variable Costs - Direct materials 8 Direct Labor 9 Variable MOH 0 Sales commissions 1 Shipping 2 Variable billing 3 Total Variable Costs 4 Contribution Margin 35 Fixed Costs 26 Fixed MOH 17 Advertising New from above 48 Sales and admn, salaries 49 Fixed billing 50 Total Fixed Costs 51 Net Operting Income 52 53 54 Requirement 6: 55 a. Calculate the degree of operating leverage using the vice-president's proposed income statement above. (2 decimal places) 56 Show your work 57 158 Answer 159 260 161 162 b. If sales increase by 10%, operating income will increase by: 1163 164 Percent Dollars 1165 13 Requirement 5: 14 15 Multiply the lowest digit (other than zero) from the last four digits of you student 10 number by 10,000 and 16 enter for C below. 117 18 a. The vice president suggests that the selling price be lowered by 10% and advertising be reduced by . $ 10,000.00 19 She is confident that this action will increase sales to 60,000 units. 120 21 The new selling price price per unit would be: $9 22 123 The new total advertising would be: $90,000 124 125 126 127 128 129 b. Prepare a new contribution margin Income statement, using the vice president's recommendation. Remember, when volume changes (number of units), 130 total variable costs change proportionately. To get total variable costs, multiply the per unit amounts from Requirement 3 by the new number of units. 131 132 Total Units Amount 133 60,000 Per Unit 134 135 Sales $ 540,000.00 $9 New from above 136 Variable Costs 137 Direct materials 138 Direct Labor 139 Variable MOH 140 Sales commissions 141 Shippine 142 Variable billing 143 Total Variable costs 144 Contribution Margin 145 Fixed Costs 146 Fixed MOH 147 Advertising New from above 148 Sales and admn salaries 149 Fixed billing 5 Sales $ 540,000.00 $9 New from above 5 Variable Costs - Direct materials 8 Direct Labor 9 Variable MOH 0 Sales commissions 1 Shipping 2 Variable billing 3 Total Variable Costs 4 Contribution Margin 35 Fixed Costs 26 Fixed MOH 17 Advertising New from above 48 Sales and admn, salaries 49 Fixed billing 50 Total Fixed Costs 51 Net Operting Income 52 53 54 Requirement 6: 55 a. Calculate the degree of operating leverage using the vice-president's proposed income statement above. (2 decimal places) 56 Show your work 57 158 Answer 159 260 161 162 b. If sales increase by 10%, operating income will increase by: 1163 164 Percent Dollars 1165