Problem 1 You are the chief financial officer of a jewelry manufacturing and wholesaling company, Precious Stone Jewelry, Inc. (Your company's motto is \"Romantic selections to suit every budget\") At this morning's executive meeting, you distributed last month's income statement which contained the following information: Precious Stone Jewelry Income Statement Revenues $1,000,000 Variable costs 600,000 Contribution margin $400,000 Fixed costs 260,000 Profit before taxes $140,000 Taxes (25% of profit before taxes) 35,000 Profit after taxes $105,000 During the meeting, the various officers of the company made the following reports: ' The marketing director indicated that, due to a competitor leaving the market, Precious Stone could raise the unit selling price on all products by 20% without affecting demand. 0 The operations director indicated that, due to recent advances in technology, the company's unit variable costs could be reduced by 20%. ' The controller distributed a new tax hill, just signed into law, that will increase the company's tax rate to 30%. _ Required a. What is your company's current breakeven revenue? (For this question, ignore all of the changes announced at the meeting.) b. Ignoring the other two changes, what effect would raising the unit selling price by 20% have on breakeven revenue (i.e., by how much would breakeven revenue decrease)? c. Ignoring the other two changes, what effect would decreasing the unit variable cost by 20% have on the breakeven revenue (i.e., by how much would breakeven revenue decrease)? d. Ignoring the other two changes, what effect does a change in the tax rate have on the breakeven revenue? e. Suppose all of the changes announced at the meeting do take place. What will your company's profit after taxes be next month