Arrow Products typically earns a contribution margin ratio of 25 percent and has current fixed costs of $80,000. Arrow's general manager is considering spending an additional $20,000 to do one of the following.

1.Arrow new marketing strategy will increase sales revenue by 5 percent.

2.Arrow invested in new computer system that is expected to increase its margin ratio to 30 percent.

Sales revenue for the coming year was initially forecast to equal $1,200,000 (that is, without implementing either of the above options).

Required:

a.what will be the projected operating income for each option?

b.For each option, how much will projected operating income increase or decrease relative ?

c.By what percentage would sales revenue need to increase to make the ad campaign as attractive as the ordering system?