A companys contribution format income statement for the most recent month is given below:

Sales (13,500 units at $20 per unit)	$270,000
Variable Costs	$135,000
Contribution Margin	$135,000
Fixed Costs	$90,000
Net Operating Income	$45,000

The president is convinced that a 20% reduction in price, along with a $50,000 advertising surge, will cause unit sales to triple. Prepare a new contribution format income statement that reflects this proposal. Create a table like above to format your answer.

Explain (using specific numbers) the exact cause of the difference in the net operating income compared to the original scenario. Do not refer to simple differences in the line-item values from the two contribution format income statements. Create a table (if needed) to organize this answer.

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