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Informal Seating Company is currently selling 1,000 overszed bean bag chairs a month at a price of $75 per chair. The variable cost of each
Informal Seating Company is currently selling 1,000 overszed bean bag chairs a month at a price of $75 per chair. The variable cost of each chair sold includes $30 to purchase the bean bag chairs from suppliers and a $8 sales commission Fixed costs are $8,000 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. Cost of goods sold 30,000 8,000 Operating expenses Contribution margin Fixed expenses Operating income (loss) 38,000 37,000 8,000 S 29,000 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. Alte ative 1: The company believes volume will increase by 16% salespeople are paid a commission o 13% o the sales price rather than the cument $8 per unit. Use parentheses or a minus s n for an operating loss. Informal Seating Company Contribution Margin Income Statement Sales revenue Variable expenses: Cost of goods sold Operating expenses Contribution margin Fixed expenses Oneratina income (lnss
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