Chapter 4 Question (38 minutes, 25 marks) Big Heat (Bio) is a locally owned business that sells and installs garage heating units. It purchases its products from a reputable manufacturer and tell them at the level Big sells their heaters, including installation, on average, for $1,000 each. The average cost from the manufacturer in $1,200 each. Din pays the salespeople as commission of 10% of monthly sales revenues Advertising costs per month are $20,000 and the monthly admin salaries are $75,000 in January, Big sold 2.500 heig units. Their corporate income tax rate is 20% REQUIRED: For the month of January propare a contribution format income statement ricado a columns for per unit amounts and percentage of ten ma appropriat (9 Marks) 2 Calculate the following for January brakoven point in sales revenue using the contribution margin ratio margin of safety in units operating leverage (5 Mark) 3 If the target net income is $850,000 for next month, how many heating units would have to be cold? (3 Marka) Despite the pandemic, the sales manager is convinced that it all the following changes are implemented next month, unit salos will double (refer to the original data) decrease the unit selling price by $200. Increase the monthly admin salaries by 100% Increase the advertising budget by 56,000 per month successfully negotiates a 15% decrease in the cost of the heating units increase the sales commission to 20% Calculate the total impact on operating income of making all the above changes (show all calculations cluarly or no marks will be awarded) 7 marks) Based on your calculations should management make this change? (1mark)