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Davis Kitchen Supply produces stoves for commercial kitchens. The costs to manufacture and market the stoves at the company's nomal volume of 6,000 units per

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Davis Kitchen Supply produces stoves for commercial kitchens. The costs to manufacture and market the stoves at the company's nomal volume of 6,000 units per month are shown in the following table: Unit manufacturing costs S 41 Variable materials Variable labor Variable overhead Fixed overhead 16 51 Total unit manufacturing costs Unit marketing costs $ 174 Variable Fixed 16 61 Total unit marketing costs Total unit costs $ 251 Unless otherwise stated, assume that no connection exists between the situation described in each question; each is independent. Unless otherwise stated, assume a regular selling price of $408 per unit. Ignore income taxes and other costs that are not mentioned in the table or in the question itself Required a. Market research estimates that volume could be increased to 7,000 units, which is well within production capacity limitations if the price were cut from S408 to $363 per unit. Assume that the cost behavior pattems implied by the data in the table are correct. a-1. What would be the impact on monthly sales, costs, and income? (Select option "increases" or "decrease", keeping price before reduction as the base. Select "none" if there is no effect.) Before Price ReductionAfter Price Reduction Impact Sales price Quantity Revenue Variable manufacturing costs Variable marketing costs Contribution margin Fixed manufacturing costs Fixed marketing costs Income a-2. Would you recommend taking this action? Yes O No

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