**Hello I am only asking for the RED circled portion to be answered**

Home Seating Company is currently selling 3,200 oversized bean bag chairs a month at a price of $75 per chair. The variable cost of each chair sold includes $55 to purchase the bean bag chairs from suppliers and a $2 sales commission. Fixed costs are $7,000 per month. The company is considering making several operational changes and wants to know how the change will impact its operating income. Read the requirements Requirement 1. Prepare the company's current contribution margin income statement. (Use parentheses or a minus sign for an operating loss.) Home Seating Company Contribution Margin Income Statement 240,000 Sales revenue Variable expenses Cost of goods sold $ 176.000 6,400 182,400 Operating expenses Contribution margin 57,600 7,000 Fixed expenses $ 50.600 Operating income (loss) Requirement 2. Calculate the change in operating income that would result from implementing each of the following independent strategy alternatives. Compare each alternative to the current operating income as you calculated in Requirement 1. Consider each alternative separately a. Alternative 1: The company believes volume will increase by 10% if salespeople are paid a commission of 12% of the sales price rather than the current $2 per unit. (Use parentheses or a minus sign for an operating loss.) Home Seating Company Contribution Margin Income Statement Sales revenue 264,000 Variable expenses Cost of goods sold 31680 28800 204800 Operating expenses Contribution margin 59200 7,000 Fixed expenses 52200 Operating income (loss)