Exercise 2) Greathouse Company's fiscal year ends every June 30 Darlene, the owner, is trying to decide which route she should take for the remaining three quarters of the fiscal year. Before the start of the fiscal year, her company made the following estimates on her expensive products: Selling Price $7,000 per unit: Variable Costs $2,000 per unit: and Fixed Costs in total) 55,560,000. As of September 30, Darlene was very disappointed with her first quarter income statement. She had only sold 300 units of her expensive products at the $7,000 selling price While she was drinking a bottle of wine to calm herself down, she ask her accountants to determine what the net income would be for the entire fiscal year if she chose one of the following mutually exclusive alternatives below (she named them after the wines she had that night!): The Merlot Option: In this option, Darlene wants to reduce the selling price by 15%. She thinks that at this reduced price, she could sell 1,400 units during the remainder of the year. All other costs would stay as budgeted. The Chardonnay Option: In this option, Darlene wants to use crappy materials, which would lower the variable cost per unit by $750. Because of this reduction in cost, the selling price will also be reduced by $800. She believes that she could sell 1.130 units during the remainder of the year. The White Zinfandel Option: In this option, Darlene thinks she could sell 1.500 units during the remainder of the year if she reduced fixed costs by 5% and lowered the selling price by 25%. Variable cost would remain as budgeted. Required: 1. If no changes are made to the selling price or cost structure, determine the number of units that Greathouse Company must sell (a) to break even and (b) to achieve a net income objective of $900,000. Assume that her overall income tax rate is 40%. Prepare Contribution Margin Format Income Statements showing Greathouse Company's Net Income for the fiscal year ending June 30 under each of her wine based alternatives. Again, each one is mutually exclusive of the other. Which wine based alternative should Darlene accept/drink