Gadgets of the Past (GOP) produces old-fashioned simple corkscrews. Last year was not a good year for sales but GOP expects the market to pick up this year. Last year's income statement showed

To take advantage of the anticipated growth in the market, GOP is considering various courses of action:

1. Do nothing. If GOP does nothing, it expects sales to increase by 10%.
2. Spend $2,000 on a new advertising campaign that is expected to increase sales by 50%.
3. Raise the price of the corkscrew to $6.50. This is expected to decrease sales quantities by 20%.
4. Redesign the classic corkscrew and increase the selling price to $7.50 while increasing the variable costs by $1.00 per unit. The sales level is not expected to change from last year.

Requirements

Evaluate each of the alternatives considered by GOP. What should GOP do?

Requirement. Evaluate the alternatives by completing an income statement for each alternative.

Data Table Sales revenues ($5.00 per corkscrew) $ 75,000 45,000 Variable cost ($3.00 per corkscrew) Contribution margin 30,000 12,000 Fixed cost $ 18,000 Operating income Print Done Requirement. Evaluate the alternatives by completing an income statement for each alternative. Alternative 1 Alternative 2 Alternative 3 Alternative 4 Sales Revenue Variable Costs Contribution Margin Fixed Costs Operating Income