5-b. Would you recommend that the company do as the sales manager suggests?

• Yes

• No

6. Refer to the original data. Assume again that the company sold 24,000 units last year. The president feels that it would be unwise to change the selling price. Instead, he wants to increase the sales commission by $5 per unit. He thinks that this move, combined with some increase in advertising, would increase annual unit sales by 50%. By how much could advertising be increased with profits remaining unchanged? Do not prepare an income statement; use the incremental analysis approach.

Continuing from due to the Chegg Policy of 4 questions per post: https://www.chegg.com/homework-help/questions-and-answers/4-assume-operating-results-last-year-follows-sales-800-000-variable-expenses-527-000-contr-q51405631?trackid=onlYLVuv

5-a. Refer to the original data. Assume that the company sold 24,000 units last year. The sales manager is convinced that a 17% reduction in the selling price, combined with a $42,000 increase in advertising expenditures, would cause annual sales in units to increase by 20%. Prepare two contribution format income statements, one showing the results of last year's operations and one showing what the results of operations would be if these changes were made. (Round "Per Unit" answers to 2 decimal places.) KLEIN COMPANY Contribution Margin Income Statement Last Year 24,000 units Total Per Unit Proposed units Total Per Unit Sales Variable expenses Contribution margin Fixed expenses Net operating income 0 0.00 0 0.00 $ 0 $ 0