contribution margin income statement is as follows for the 1^st quarter of 2017:

Coffee Company
Contribution Margin Income Statement
For the Quarter Ended March 31, 2017
Sales Revenue ($2.00 per cup)		$360,000
Less Variable Expenses:
Cost of Goods Sold	$90,000
Marketing Expenses	18,000
General & Administrative Expenses	9,000	117,000
Contribution Margin		$243,000
Less Fixed Expenses:
Marketing Expenses	$45,000
General & Administrative Expenses	18,900	63,900
Operating Income		$179,100

The Company wants to stay with its current supplier of coffee; however, the current supplier is increasing its prices quite substantially by $4.00 per pound of coffee. Each pound of coffee makes 40 cups of coffee. (Hint: You will need to convert price per pound of coffee to price per cup.) Due to recent growth, Wake Me Up Coffee Company has decided to hire a new manager that would cost the company $7,500 per quarter for the new positions salary.

The Company believes that it can reduce variable marketing expenses by $0.05 per cup by increasing fixed marketing expenses by $4,000. With this new marketing scheme, the company believes it can generate a 5% increase in sales volume all the while keeping the price of each cup of coffee at $2.00.

The Company wants to put these changes into place by the third quarter of 2017; however, it needs to answer a few questions internally before it decides to move forward.

All scenarios are independent of one another. Please show all calculations for full credit. Prepare an analysis for the following in good, readable, easy-to-follow form:

Find the unit contribution margin as well as the contribution margin ratio before the changes are implemented.

Find the breakeven point in cups of coffee (units) and in sales dollars before the changes are implemented. Round the answers up to the next whole number.

Find the new unit contribution margin as well as the contribution margin ratio after the changes are implemented.

What is the impact on Wake Me Up Coffee Companys Operating Income based on the above changes? Should the company proceed with all the changes? If yes, why? If no, what changes would you suggest if the company wants to stay with its current coffee supplier?

Based on the new cost structure, how many cups of coffee would Wake Me Up Coffee Company need to sell to maintain a profit of $179,100? Round the answer up to the next whole number.

Based on the new cost structure, how many cups of coffee would Wake Me Up Coffee Company need to sell to earn a target profit of $250,000? Round the answer up to the next whole number.