cannot figure this out

CRITICAL THINKING Decision Case 21-1 > Ethica Samp Each are porting goods stotes that supply uniforms to youth baseball teams. Followinen Hurley's income statement for 2016: oppo The Hurley Har Company manufactures bascball hats. Hurley's primary cus produ HURLEY HAT COMPANY Income Statement Year Ended December 31, 2016 Sales Revenue Cost of Goods Sold Gross Prot Selling and Administrative Expenses Operating Income 5 1,500,000 700,000 800,000 500,000 S 300,000 Units prod Units sold Sales price Variable m Total fixed absor that b to this voi In 2016. Hurley produced and sold 200,000 baseball hats. Of the Cost of Good Requi Sold. $150,000 is fixed: 80% of the Selling and Administrative Expenses are fixed. There were no beginning inventories on January 1, 2016 2. Pre The company is operating at 100,000 hats below full prod is considering increasing advertising to increase sales to the production capacity levd The marketing director predicts that an additional S100,000 expenditure for advertis ing would increase sales to 300,000 hats per year uction capacity and 3. Cal 4. Pre 5. Cal 6. Giv thir The sales manager has been negotiating with buyers for several national sporting goods retailers and recommends the company expand production capacity to 400 hats in order to secure long-term contracts. The expansion is expected to increaseit manufacturing costs by $200.000 per year. Additionally, the retailers are requesting a higher-quality hat, and the changes to the hat materials and manufacturing procsCommu would increase variable manufacturing costs by S1 per hat for the additional 20L0 hats. (The original 200.000 hats manufactured and sold would not be affected by th change. In 100 costing Requirements 1. Use the data from the 2016 incorne statement to prepare an income state using variable costing. Assume no beginning or ending inventories me statemen Calculan MyAccou 2. Prepare an absorption costing income statement assuming the company 3. Refer to the original data. Prepare an absor 4. Which option should the company punsue? Explain your reasoning contribution margin ratio. Round to two decimal places. advertising and production and sales increase to 300,000 hats. ing the company increases capacity and sales and production increass to > Quick C ption costing income statement ae total hats