cvp sensitivity analysis

Gulf bearings a) The marketing manager has suggested that if a better part costing an extra $25.00 mark)? were used in the fasteners, sales would increase 10% (in units). In this case, what 6 marks operating income would be expected (2 marks)? What would be your decision (1 b) The production manager suggests that if the better parts above were used and advertising was increased by $40,000, sales (in units) would increase a total of 30%. In this case, what operating income should Philco expect (3 marks)? What would be your decision (1 mark)? c) The engineering manager states that if Philco did both the above, (ie, used the better parts and advertising was increased) it should charge more for its fasteners. She thinks that if the price were raised 15% the advertising campaign would be enough to keep sales at the current level of 1,500 units. In this case, what operating income should Philco expect (3 marks)? What would be your decision (1 mark)? Explain (1 mark).Question #3: CVP Sensitivity Analysis (12 marks) use in the aerospace industry. Philco Fastners manufactures and sells a nano-manufactured high tensile fastener for Required: - Complete the income statement below and use the information from this statement to answer the questions on the following pages using the incremental method of sensitivity analysis (ie, preparing new income statements to determine your answer will not result in full marks) Philco Fasteners Income Statement for the year ended December 31, 2019 Sales (1,500 units) $ Total $ per unit less: Variable Costs: $800.00 Raw Materials $400.00 Direct Labor Manufacturing Overhead 9.0% Total Variable Costs 72.5% Contribution Margin less: Fixed Costs Advertising Expense 25,000 Utility Expense - Factory 65,000 Utility Expense - Office 80,000 Wage Expense - Indirect Labor 50,000 Total Fixed Costs 220,000 Operating income 110,000