Redo Alpine, Inc.s 2012 Income Statement in the contribution format. Show both a total column and a per unit column on your statement. 5 pts. _____

In an effort to make 2013 profitable, Micah Patdu, the president is considering two proposals prepared by members of her staff:

Jon Michael, the sales manager would like to reduce the unit selling price by 25 percent. He is certain that this would fill the plant to capacity.

Mary Wilkinson, the executive vice president would like to increase the unit selling price by 25 percent, increase the sales commissions to 12 percent of sales, and increase advertising by $90,000. Based on experience in another company, she is confident this would trigger a 50 percent increase in unit sales.

Prepare two contribution income statements, one showing what profits would be under Jon Michaels proposal and one showing what profits would be under Mary Wilkinsons proposal. On each statement, include both total and per unit columns (do not show per unit data for fixed costs) 15 pts. _____

Refer to the original data. Micah Patdu, the president thinks it would be unwise to change the selling price. Instead, she wants to use less costly materials in manufacturing units of product, thereby reducing costs by $1.73 per unit. How many units would have to be sold during 2013 to earn a target profit of $59,000 for the year? 5 pts. _____

Refer to the original data. Alpine, Inc.s advertising agency thinks that the problem lies in inadequate promotion. By how much can advertising be increased and still allow the company to earn a target return of 4.5 percent on sales of 60,000 units? 5 pts. _____

Refer to the original data. Assume that the company was approached by an overseas distributor who wanted to purchase 15,000 units on a special price basis during June 2012. There would be no sales commission on these units. However, shipping costs would increase by 80 percent per unit, and variable administrative costs would be reduced by 50 percent per unit on these special order units. In addition, Alpine, Inc., would have to pay a foreign import duty of $3,150 on behalf of the overseas distributor in order to get the goods into the country. Given these data, what unit price would have to be quoted on the 15,000 units by Alpine, Inc., to allow the company to earn an overall profit of $18,000 for the year ended June 30, 2012 on total operations? Regular business would not be disturbed by this special order. 10 pts. _____

Participation: 20 pts. _____ These points will be assigned by me and will be based on each team members activity on the team discussion board or other means of communication.

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ALPINE, INC. Income Statement For the year ended June 30, 2012 Sales (40,000 Units at $12) $480,000 Less: Cost of Goods Sold Direct Materials $120,000 Direct Labor 65,600 Manufacturing Overhead 90,000 275,600 Gross Margin 204,400 Less: Operating expenses: Selling expenses: Variable: Sales Commissions $38,400 Shipping 14,000 52,400 Fixed (Advertising, salaries) 110,000 Administrative expenses: Variable (billing, other) 3,200 Fixed (salaries, other) 85,000 250,600 Net Loss $(46,200) All variable expenses in the company vary in terms of units sold, except for sales commissions, which are based on sales dollars. Variable manufacturing overhead is 50 cents per unit. The companys plant has a capacity of 70,000 units. Management is particularly disappointed with 2012s operating results. Several possible courses of action are being studied to determine what should be done to make 2012 profitable. REQUIRED: 1. Redo Alpine, Inc.s 2012 Income Statement in the contribution format. Show both a total column and a per unit column on your statement. 5 pts. _____ 2. In an effort to make 2013 profitable, Micah Patdu, the president is considering two proposals prepared by members of her staff: a. Jon Michael, the sales manager would like to reduce the unit selling price by 25 percent. He is certain that this would fill the plant to capacity. b. Mary Wilkinson, the executive vice president would like to increase the unit selling price by 25 percent, increase the sales commissions to 12 percent of sales, and increase advertising by $90,000. Based on experience in another company, she is confident this would trigger a 50 percent increase in unit sales. Prepare two contribution income statements, one showing what profits would be under Jon Michaels proposal and one showing what profits would be under Mary Wilkinsons proposal. On each statement, include both total and per unit columns (do not show per unit data for fixed costs) 15 pts. _____ 3. Refer to the original data. Micah Patdu, the president thinks it would be unwise to change the selling price. Instead, she wants to use less costly materials in manufacturing units of product, thereby reducing costs by $1.73 per unit. How many units would have to be sold during 2013 to earn a target profit of $59,000 for the year? 5 pts. _____ 4. Refer to the original data. Alpine, Inc.s advertising agency thinks that the problem lies in inadequate promotion. By how much can advertising be increased and still allow the company to earn a target return of 4.5 percent on sales of 60,000 units? 5 pts. _____ 5. Refer to the original data. Assume that the company was approached by an overseas distributor who wanted to purchase 15,000 units on a special price basis during June 2012. There would be no sales commission on these units. However, shipping costs would increase by 80 percent per unit, and variable administrative costs would be reduced by 50 percent per unit on these special order units. In addition, Alpine, Inc., would have to pay a foreign import duty of $3,150 on behalf of the overseas distributor in order to get the goods into the country. Given these data, what unit price would have to be quoted on the 15,000 units by Alpine, Inc., to allow the company to earn an overall profit of $18,000 for the year ended June 30, 2012 on total operations? Regular business would not be disturbed by this special