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please help with all requirments Comty Seating Company is currently seling 3,500 oversized bean bag chairs a month at a price of $100 per chair.
please help with all requirments
Comty Seating Company is currently seling 3,500 oversized bean bag chairs a month at a price of $100 per chair. The variable cost of each chair sold includes $60 to purchase the bean bag chairs from supplers and a $4 sales commission. Fixed costs are $6,000 per month. The company is considering making several operational changes and wants to know how the change will impact its operating income. Read the reguiremants. Requirements 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 atematives. Compere each altemative to the current operating income as you calculated in Requirement 1. Consider each alternative separately. a. Alternative 1: The company beleves volume wil increase by 15% if salespeople are paid a commission of 10% of the sales price rather than the current \$4 per unit. b. Alternative 2: The company beleves that spending an additonal $5,000 on advertising would increase sales volume by 10%. e. Alternative 3: The company is considering raising the selling price to $120, but beleves volume would drop by 25% as a resuat. d. Alternative 4: The company would like to source the product from domestic suppliers who charge $12 more for each unit. Management beleves that the "Made in the USA" label would increase sales volume by 15% and would allow the company to increase the sales price by 55 per unit. In addition, the company would have to spend an addifonal $3,000 in marketing costs to get the word out to potential customent of this change. Requirement 2. Calculate the change in operating income that would result from implementing each of the following independent strategy allernatives. Compare each alternative to the current operating inceme as you cakculated in Recuirement 1. Consider each allornative soparately. a. Alternative 1: The company believes volume will increase by 15% if salespeople are paid a commission of 10% of the sales price rather than the current S4 per unit. (Use parentheses or a minus sign for an operating loss.) Step by Step Solution
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