Part 1-25 points Below is the budgeted income for Satchmo Incorporated for the upcoming year including information on machine hours (MH) and sales volume, in units, by product. Satchmo Incorporated Budgeted Income for this year Product A Product B Product C Product D Total 8,000 MH 50,000 MH Machine Hours Units 5,000 MH 12,000 MH 1,000 units 3,000 units $150,000 $200,000 $350,000 150,000 25,000 MH 12,500 units 5,000 units 80,000 $90,000 $790,000 40,000 Sales Revenue Less: Variable Costs Contribution Margin Less: Fixed Costs Operating Income 60,000 $90,000 $120,000 $200,000 $ 50,000 80,000 170,000 70,000 330,000 $460,000 400,000 vided the 80,000 $ 10,000 $ 40,000 $ 30,000 $ (20,000) $ 60,000 order is Management is concerned with the budgeted performance of Product D. Included in the fixed costs assigned to each product line are common fixed costs of $150,000 that are allocated to the products by machine hours. These costs are expected to stay at $150,000 regardless of the firm's decisions on production. The remaining fixed costs assigned to each product are direct fixed costs that can be avoided by dropping a product line. Required (Show and label your work in a professional manner.) 1. By how much will income increase or decrease if the firm drops Product D? 2. Assume the budgeted 50,000 MH is the firm's capacity production. Demand for the firm's products is such that sales of any of the products could be increased by up to 20%. At the prevailing prices. If the firm were to drop product D and increase sales of the other three products. By how much should the firm increase production of each product: Product A, Product B and Product C? What income level will the firm achieve by dropping Product D and increasing the level of sales for the other products, according to your calculations?