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Following are abbreviated income statements for two companies, Ainsley and Bard: Ainsley Bard Sales 2,000,000 2,000,000 Variable Cost (1,400,000) 0 Contribution Margin 600,000 2,000,000 Fixed
Following are abbreviated income statements for two companies, Ainsley and Bard: Ainsley Bard Sales 2,000,000 2,000,000 Variable Cost (1,400,000) 0 Contribution Margin 600,000 2,000,000 Fixed Cost 0 (1,400,000) Operating income 600,000 600,000 Ainsley and Bard produce an identical product and both sell that product at $40. Both companies are searching for ways to increase operating income. Managers of both companies are considering three identical strategies. For each of the following strategies, enter the new operating income amounts for Company Ainsley and Company Bard. a. Decrease sales price 30 percent to increase sales volume 60 percent. Company Ainsley: $ Company Bard: $ b. Increase sales price per unit 30 percent, which will cause sales volume to decline by 15 percent. Company Ainsley: $ Company Bard: $ c. Increase advertising by $200,000 to increase sales volume by 15,000 units. Company Ainsley: $ Company Bard: $
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