Cost-Volume-Profit "Team Activity" Jen & Berry's sold 100,000 pints of ice cream last month according to the following contribution format income statement: JERG LERRIS Total $ Per Unit $ SALES VARIABLE COSTS CONTRIBUTION MARGIN FIXED COSTS NET INCOME $330,000 200 000 $ 130,000 50.000 $ 80,000 $3.30 2.00 $ 1.30 p ils A competing company, Un-Friendly's, also sold 100,000 pints of ice cream last month according to the following Un Friendly's contribution format income statement: Total $ Per Unit $ SALES $255,000 $2.55 VARIABLE COSTS 100,000 CONTRIBUTION MARGIN $ 155,000 $ 1.55 FIXED COSTS 75,000 NET INCOME $ 80,000 1.00 Both companies sold the same amount of ice cream and had the same Net Income but have different price and cost structures. Jen & Berry's uses higher quality ingredients (variable cost) and charges a higher price than its competitor. Un- Friendly's spends more on advertising (fixed cost) and sells at a lower price than Jen & Berry's. 5. Using last month's income statements on page 2, calculate the safety margin in units (pints of ice cream) for each company. 6. Jen & Berry's is considering two options to increase sales next month (and hopefully profit): Option #1: Double the pints sold next month by decreasing the price by 15 cents to $3.15. Option #2: Double the pints sold next month by spending an additional $20,000 next month (fixed cost) on advertising. Price of ice cream remains at $3.30 per pint. Which option should Jen & Berry's choose?? Explain your answer by showing calculations for both options. Un-Friendly's is considering the same two options to increase sales next month (and hopefully profit): Option #1: Double the pints sold next month by decreasing the price by 15 cents to $2.40. Option #2: Double the pints sold next month by spending an additional $20,000 next month (fixed cost) on advertising. Price of ice cream remains at $2.55 per pint. Which option should Un-Friendly's choose?? Explain your answer by showing calculations for both options