Global Corporation, Inc. is reviewing their performance for the fiscal year ending, $9/30/2023$ which wasn$$t great. Global$$s accounting department prepared the following Proforma Income Statement for your review and use.

Global Corporation

Proforma Income Statement

For the fiscal year$-$ending $9/30/2023$

$($Amounts in $000$s$)$

Revenues $$600,000$

Production related expenses:

Direct material costs $($$$100,000)$

Direct labor costs $(210,000)$

Manufacturing overhead $(180,000)$

Non$-$product related expenses

Sales and promotion $(50,000)$

General administration $(75,000)$

Operating Income$/($Loss$)($$$15,000)$

Other facts:

$$ All direct material costs are variable as are all direct labor costs.

$50\%$ of manufacturing overhead is variable, $40\%$ of sales and promotions expenses are variable, and $25\%$ of general and administrative expenses are variable.

Required

Management assigns you the task of using the information above to answer the following:

A$.$ Prepare the company$$s income statement in the $$Contribution$$ format.

B$.$ Determine the $($a$)$ sales in units and $($b$)$ sales in dollars, for the company to achieve $$break$-$even$$ operating income.

C$.$ The company$$s goal is to generate an operating income of $$125,000,$ determine the $($a$)$ sales in units and $($b$)$ sales in dollars required for the company to achieve their desired operating income amount.

D$.$ The company$$s sales manager proposes the following:

a$.$ Change the advertising approach from network television to an on$-$line model which will reduce advertising expenses by $$15,000$ but target the company$$s promotional activities to the right customer.

b$.$ Deliver the product in a more exciting and attractive package, which would cost an additional $$3$ for every unit of sales.

c$.$ Move to $1-$day delivery for all on$-$line sales. One$-$day delivery would increase delivery charges by $$3\mathrm{.}50$ per unit sold.

d$.$ The sales manager believes that with these changes $$unit sales will double, for sure$.$

Prepare an analysis of the implications for operating income of adopting the sales manager$$s recommendation.

E$.$ Based on your analysis in C$.,$ should the company make the sales manager$$s proposed changes? Use your analysis to justify your answer.