PART I In mid-November 2018, Bob, Paul and Cherry were almost through with the 2018 operating budget for their company, Holstein Corporation. Holstein produced milk products in three primary forms {yogurt1 cheese and ice-cream). The industry was dominated by Milksted, Laughingcow, Happycow, and Holstein, which made several of types of milk products. Holstein was a small player in the industry with solid customer base and a protable business over last few years. This year was a little different their prot was signicantly lower than the prior years. The company's proforma nancials are provided in Exhibit 1. The company produces 3 products. The standard costs for these three products are provided in Exhibit 2. The selling, general, and adminisn'ative (SG&A), other costs, interest income, and interest expense were likely to remain the same no matter which product-line combinations are used by the company. The company hires your services as their consultant. They believe that they can improve their bottom-line (net prots) by changing the product mix, pricing and advertising decisions. (Note: The total production capacity is xed at 420,000 units). Ifthe company decreases the price of its product, the result would be an increase in the sales of the product; the company provides you the following information on the estimated increase in the sales (based on the research by their sales team). lcecream Decrease in Price $1.60 25,000 20,000 12,000