Question Help Natural Seating Company is currently seling 2.500 oversized bean bag chairs a month at a price of $80 per chair. The variable cost of each char sold includes $55 to purchase the bean bag chair trom suppliers and as sales com o Fbed costs are $8.000 per month. The company is considering making several operational changes and wants to know how the change will impact is operating income Read the requirements Requirement 1. Prepare the company's current contribution margin income and Natural Seating Company Contribution Margin income Statement Requirements Sales revenue Variable expenses Cost of goods sold Operwing expenses Contribution margin Fred expenses 1. Prepare the company's current contribution margin income statement Calculate the change in operating income that would result from implementing each of the following independent strategy amatives Compare each aterative to current operating income as you calculated in Requirement 1. Consider achamative separately Alternative 1: The company believes volume will increase by 10% salespeople are paid a commission of 15% of the price rather than Operating income foss) Alternative 2: The comary believes that spending an additional $3.000 on advertising would increase sales volume by 12% e. Alternative. The y is considering raising the selling price to $85, but believes volume would drop by 24% as a result d. Alternative & The company would like to source the product from domestic wuppliers who charge $13 more for each unt Management believes that the "Made in the USA label would increase sales volume by 10% and would allow the company to increase the sales price by $13 per unt. In addition, the company would have to spend to $8.000 marketing costs to get the word out to potential customers of this change Enter any number in the edit fields and then click Check Answer Print Dono chairs a month at a price of $80 per chair. The variable cost of each chair sold includes $55 to pun i Requirements om 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 alternatives. Compare each alternative to the current operating income as you calculated in Requirement 1. Consider each alternative separately. a. Alternative 1: The company believes volume will increase by 10% if salespeople are paid a commission of 15% of the sales price rather than the current $6 per unit. b. Alternative 2: The company believes that spending an additional $3,000 on advertising would increase sales volume by 12%. C. Alternative 3: The company is considering raising the selling price to $85, but believes volume would drop by 24% as a result. d. Alternative 4: The company would like to source the product from domestic suppliers who charge $13 more for each unit. Management believes that the "Made in the USA" label would increase sales volume by 10% and would allow the company to increase the sales price by $13 per unit. In addition, the company would have to spend an additional $8,000 in marketing costs to get the word out to potential customers of this change. Print Done Clear All Question Help C Natural Seating Company is currently selling 2.500 oversized bean bag chairs a month at a price of $80 per chai The variable cost of each chair sold includes $55 to purchase the bean bag charom suppliers and as a Fixed costs are $8.000 per month The company is considering making several operational changes and want to know how the change wilmpact its operating income Read the common are the oran ge for an operatings) Requirement 1. Prepare the company's current contribution margin income statements Natural Seating Company Contribution Margin income Statement Sales revenue Variable expenses Cost of goods sold Operating expenses Contribution margin Fred expenses Operating income (los)
