Modest Seating Company is currently selling 2,500 oversized bean bag chairs a month at a price of $90 per chair. The variable cost of each chair sold includes $30 to purchase the bean bag chairs from suppliers and a $7 sales commission. Fixed costs are $15,000 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. 0 Requirements Requirement 1. Prepare the company's current contribution margin income staten Modest Seating Company Contribution Margin Income Statement Sales revenue $ 225,000 Variable expenses: Cost of goods sold $ 75,000 17,500 1. Prepare the company's current contribution margin income statement. 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 12% if salespeople are paid a commission of 7% of the sales price rather than the current $7 per unit. b. Alternative 2: The company believes that spending an additional $5,500 on advertising would increase sales volume by 13%. c. Alternative 3: The company is considering raising the selling price to $98, but believes volume would drop by 10% as a result. d. Alternative 4: The company would like to source the product from domestic suppliers who charge $13 more for each unit. Management believes that the "Made in the USA" label would increase sales volume by 12% and would allow the company to increase the sales price by $8 per unit. In addition, the company would have to spend an additional $1,000 in marketing costs to get the word out to potential customers of this change. 92,500 Operating expenses Contribution margin 132,500 15,000 Fixed expenses $ 117,500 Operating income (loss) Requirement 2. Calculate the change in operating income that would result from i 1. Consider each alternative separately. a. Alternative 1: The company believes volume will increase by 12% if salespeopl Modest Seating Company Contribution Margin Income Statement