Bowser Bones, the operations manager at In the Dog House Inc., a manufacturer of cozy dog houses, emails you a suggestion that a 5% reduction in sales price combined with a $50,000 increase in internet advertising expenditures would increase units sold by 12%.

You decide to run the numbers to see if that would make sense for the company. You review last years results in the table below.

Last Year:
	Total	Per Unit
Sales	$1,500,000	$200.00
Less: Variable expenses	712,500	95.00
Contribution margin	787,500	$105.00
Less: Fixed expenses	605,000
Net operating income	$182,500

Required:

Prepare comparative statements to see if what Bowser suggests will improve the bottom line. After preparing the statements, write Bowser a business-like text message on what you have calculated and whether it supports his suggestion. (6 marks)