Current Income Statement Bertolon Inc. Contribution Ince State Propose Income Statement Bertolon Ins Contribution Income State Per Unit Total $2,700,000.00 10.000.000 900.000.00 350.000.00 $550,000.00 Total Per Unit 520665000 556.70 191.000.00 40.00 826.690.00 $16.70 100000 $46.650.001 2012 Contribution margin Fixed expenses Net operating income Contribution Fixed expenses Net operating income Break even in units sold Find expens 150.000.00 Unit contribution margin $20.00 Breaksyen in units sold 17.500 Break even in units sold Fixed expen 130 000.000 contribution main $16.70 Break even in units sold 22,750 Break even in dollars reak even in unit Sales NT unit Break even in dollars 17,500 560.00 $100,000.00 Hrvak even in dollars Brak even in units 22.7541 Sales per unit S60 Brak en in der TSI 21, 179,64 Margin of safety in Units Sales Brak even sales Margin of safety in units 45.000 17.500 Margin of safety in Units Sales Brak en les Margin of safety in units 49,500 22754.191 26,745.509 Margin of Safety in Dollars Sales $2.700.000.00 Break m sales Martin of safety in dollars $1.650.000.00 Margin of Safety in Dellars Sales 520 650.00 Break even sales 191.179.64 Margin of safety in dollars S1.516,470.36 The advertising manager for Bertolon Inc, a manufacturer of women's shoes, is currently working on a major promotional campaign. Her ideas include the installation of a new lighting system and increased display space that will add $30,000 in fixed costs to the $350,000 currently spent by the company. In an effort to increase sales volume the advertising manager is also proposing a 5.5% price decrease from the current selling price of $60 per pair of shoes. The company is currently selling 45,000 pairs of shoes and expects that these changes would bring a 10% increase in the number of shoes sold. The current variable costs for a pair of shoes are $40 and management expects this figure to remain unchanged. Management is impressed with the advertising manager's initiative and ideas but is concerned about the effects these changes will have on company profits, break-even point and margin of safety. Requirements 1. Using Microsoft Excel, prepare a contribution margin income statement based on the company's current operations. The income statement should be properly formatted and include sales, variable costs and contribution margin in total and also on a per unit basis. Right below the income statement calculate the following based on the current operations: . Break even in units sold Break even in dollars Margin of safety in units . Margin of safety in dollars 2. Using Microsoft Excel prepare a contribution margin income statement based on the advertising managers recommendations. The income statement should be properly formatted and include sales, variable costs and contribution margin in total and also on a per unit basis. Right below the income statement calculate the following based on the current operations: Break even in units sold . Break even in dollars Margin of safety in units Margin of safety in dollars - Break even in dollars Margin of safety in units Margin of safety in dollars 2. Using Microsoft Excel prepare a contribution margin income statement based on the advertising managers recommendations. The income statement should be properly formatted and include sales, variable costs and contribution margin in total and also on a per unit basis. Right below the income statement calculate the following based on the current operations: Break even in units sold - Break even in dollars Margin of safety in units Margin of safety in dollars 3. Using Microsoft Word, prepare a one-page memo in which you explain whether or not these changes should be made. Please be very careful when you prepare this memo. Your grade will be based on the following: a) Does the memo include a clear recommendation, properly supported by your analysis? Does the memo exhibit a clear and coherent overall structure? Does the memo employ correct grammar, sentence and paragraph structure? Are there punctuation and spelling errors? The heading of the memo should be as follows: MEMORANDUM TO: Put the name of your professor here FROM: Put your name here DATE: Put the date the memo is written RE: Include a one-line description of the memo topic