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Background: You are a financial analyst at a large retail company. The company is considering launching a new product line, but there is uncertainty about

Background: You are a financial analyst at a large retail company. The company is considering launching a new product line, but there is uncertainty about how sales volume will be affected by changes in price. Your task is to perform a sensitivity analysis to determine the impact of price changes on the company's financial results.
Instructions:
1. Use the following information to create a projected income statement for the new product line:
Revenue @10 pu: $500,000
Variable costs: $250,000
Fixed costs: $200,000
Net Income: $50,000
2. Assume that the company is considering two pricing strategies for the new product line:
Price A: $10
Price B: $12
3. Use the contribution margin formula to calculate the contribution margin ratio for each pricing strategy:
Contribution Margin Ratio = Contribution Margin / Revenue
Contribution Margin = Revenue - Variable Costs
4. Perform a sensitivity analysis to determine the expected impact of each pricing strategy on the company's financial results:
Scenario 1: Increase in sales volume by 10%
Scenario 2: Decrease in sales volume by 10%
5. Prepare a report summarizing your findings and recommendations for the company.

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