Larry's Board Store sells a unique brand of paddle board. The board was designed by Larry and is rated in the top 10 boards, worldwide. The board is available in multiple colours.Water sport enthusiasts rave about Larry's Board. Larry sells to retailers and also on-line.

Larry is considering ways to increase profit. Since Larry is known to reward his favourite managers with perks, all department managers are excited to provide suggestions to Larry.

The marketing manager confirms that there is no flexibility to increase prices. The market is very sensitive and competitive. The marketing manager believes the only way to increase profit is to increase units sold."Sales people are motivated by commission". The marketing manager has suggested an increase in commission to 8% of sales $.Currently the rate of sales commissions is 5%. With the increase in commission, projected sales are 11,000 boards per year.

The purchasing manager suggests that the company negotiate a more favourable contract with the supplier. At the volumes Larry purchases, the purchasing manager believes Larry could be tougher in negotiations. The purchasing manager believes the cost of the product can be decreased by at least 3%.

The current info for the existing product is:

Larry's Board
	Per unit
Selling price	$800
Variable costs	$540
Fixed costs	$180
	$ 80

Currently, Larry sells 10,000 boards per year.

Required:

Assess the 2 alternative proposals and advise Larry. Calculations of operating income, break-even and margin of safety may be helpful.Include in your assessment any non-numeric factors that Larry should consider.