Problem 3

Glass Inc. has the following information for August 2015:

Selling price		$ 27	per unit
Variable expenses		$ 18	per unit
Fixed expenses		$ 8,010	per month
Actual Units Sold		1,040

Required:

Prepare a Contribution Income Statement with the data provided.

If they spend an extra $1,000 a month in advertising, sales will increase by 100 units. Prepare a new Contribution Income Statement. Would their operating income increase or decrease?

If they decrease the selling price from $27 to $23, sales volume would increase by 50%. Prepare a new Contribution Income Statement. Would their operating income increase or decrease?

-Must show all calculations