C&C Sports Continuing Case 3-42 Universal Sports Exchange has just received notice from C&C Sports that the price of a baseball jersey will be increasing to $15.30 next year. In response to this increase, Universal is planning its sales and marketing campaign for the coming year. Managers have developed two possible plans and have asked you to evaluate them. The first plan calls for passing on the entire $0.50 cost increase to customers through an increase in the sales price. Managers believe that $10,000 in additional advertising targeted directly to current customers will allow the sales force to reach the current year's sales volume of 51,975 jerseys. The second plan relies on a new advertising campaign that focuses on the sales price remaining the same as last year. The campaign would include a new database that offers more potential customers than Universal has had access to in the past. The cost of the campaign is expected to be $5,000. Managers believe that the campaign will be more successful in generating new sales than the current incentive-based sales and marketing plan. As a result, they want to reduce the sales commission from 6% to 4% of sales and increase sales salaries by $22,000. The campaign is expected to generate an additional 10% in sales volume. UNIVERSAL SPORTS EXCHANGE Contribution Format Income Statement for the 52 Weeks Ending February 1, 2014 Per Unit Ratio Sales $1,039,500 $20.00 100% Less Variable expenses: Cost of goods sold $769,230 14.80 74% Sales commissions 62,370 1.20 Total variable expenses 831,600 16.00 Contribution margin 207,900 $4.00 20% Less Fixed expenses: Selling expenses 116,500 Administrative expenses 51,500 Total fixed expenses 168,000 Operating income $39,900 (b) Determine the expected operating income under each proposed sales and marketing plan. (Round intermediate calculations and final answers to 2 decimal places, e.g. 0.38.) Alternative 1 Alternative 2 The expected operating income Click if you would like to Show Work for this question: Open Show Work LINK TO TEXT