P7-71A (similar to) Question Help Informal Seating Company is currently selling 3.200 oversized bean bag chairs a month at a price of $78 per chair. The variable cost of each chair sold includes $30 to purchase the bean bag chairs from suppliers and a $4 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.sion for an operating lass) Requirements Informal Seating Company Contribution Margin income Statement Sales revenue S 249,600 Variable expenses Cost of goods sold S 96.000 12.800 108 800 Operating expenses Contribution margin 140,800 Fixed expenses 7.000 $ 133 800 Operating income (loss) Requirement 2. Calculate the change in operating income that would result fr Consider each altemative separately. 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 20% if salespeople are paid a commission of 15% of the sales price rather than the current $4 per unit. b. Alternative 2: The company believes that spending an additional $6,000 on advertising would increase sales volume by 11% C. Alternative 3: The company is considering raising the selling price to $93, but believes volume would drop by 14% as a result d. Alternative 4: The company would like to source the product from domestic suppliers who charge 56 more for each unit Management believes that the "Made in the USA" label would increase sales volume by 20% and would allow the company to increase the sales price by $10 per unit. In addition, the company would have to spend an additional $5,000 in marketing costs to get the word out to potential customers of this change native to the current operating income as you calculated in Requirement parentheses or a minus sign for an operaang loss a. Alternative 1: The company believes volume will increase by 20% if salesp informal Seating Company Enter any number in the edit fields and then click Check Answer Check Answer Print Done 7 parts remaining 6:11 PM Requirements 27 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 20% if salespeople are paid a commission of 15% of the sales price rather than the current $4 per unit. b. Alternative 2: The company believes that spending an additional $6,000 on advertising would increase sales volume by 11%. C. Alternative 3: The company is considering raising the selling price to $93. but believes volume would drop by 14% as a result. d. Alternative 4: The company would like to source the product from domestic suppliers who charge 56 more for each unit Management believes that the "Made in the USA label would increase sales volume by 20% and would allow the company to increase the sales price by $10 per unit. In addition, the company would have to spend an additional 65 000 in marketing costs to get the word out to potential customers of this change Print Done Score: 0.65 of 4 pts 5 of 8 (6 complete) HW Score: 54.6%, 13 65 of 29 P7-71A (similar to) Question Help Informal Seating Company is currently selling 3,200 oversized bean bag chairs a month at a price of $78 per chair. The variable cost of each chair sold includes $30 to purchase the bean bag chairs from suppliers and a 54 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 (U Requirements Informal Seating Company Contribution Margin income Statement Sales revenue $ 249,600 Vanable expenses Cost of goods sold $ 96.000 Operating expenses 12 800 108.800 Contribution margin 140.800 73000 Fixed expenses S 133.800 Operating income close Requirement 2. Calculate the change in operating income that would result from impleme Consider each alternative separately 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 20% if salespeople are paid a commission of 15% of the sales price rather than the current 54 per unit. b. Alternative 2: The company believes that spending an additional $6,000 on advertising would increase sales volume by 11% C. Alternative 3: The company is considering raising the selling price to 593 but believes volume would drop by 149 as a result d. Alternative 4: The company would like to source the product from domestic suppliers who charge $6 more for each unit Management believes that the "Made in the USA label would increase sales volume by 2096 and would allow the company to increase the sales price by $10 per unit. In addition the company would have to spend an additional 35 000 in marketing costs to get the word out to potential customers of this change current operating income as you calculated in Requirement1 a. Alternative 1: The company believes volume will increase by 20% if salespeople are pl es or a minus sign for an operating Informal Seating Company Enter any number in the edit fields and then click Check Answer Print Done Chrock es 7 parts remaining 6:12 PM