Lilliput, a one-product mail-order firm, buys its product for $60 per unit and sells it for $154 per unit. The sales staff receives a 10% commission on the sale of each unit. Its December income statement follows LILLIPUT COMPANY Income Statement For The Month Ended December 31, 2011 Sales Cost of goods sold $1,540,000 600,000 Gross profit Expenses 940,000 Sales commissions (10%) Advertising Store rent Administrative salaries Depreciation Other expenses 154,000 248,000 26,400 52,000 62,000 14,400 Total expenses 556,800 Net profit $383,200 Management expects December's results to be repeated in January, February, and March of 2012 without any changes in strategy. Management, however, has an alternative plan. It believes that unit sales will increase at a rate of 10% each month for the next three months (beginning with January) if the items selling price is reduced to $139 per unit and advertising expenses are increased by 25% and remain at that level for all three months. The cost of its product will remain at $60 per unit, the sales staff will continue to earn a 10% commission, and the remaining expenses will stay the same