Rockster Company manufactures and sells game consoles. The company is in the process of preparing the contribution income statement for the next year. The key data are as follows: Sales revenue $3,000,000 Variable costs Variable manufacturing 800,000 Variable marketing 100,000 Variable administration 100,000 Fixed costs Fixed manufacturing 700,000 Fixed marketing 300,000 200,000 Fixed administration The company expects to sell 25,000 units next year though the company has the capacity to produce 30,000 units a year. (a) (b) (c) Use CVP analysis to calculate the unit contribution margin and break-even point in dollars. (6 marks) Suppose the sales manager proposes to lower the selling price by 5%. This will result in an increase of 5,000 units in sales. Use CVP analysis to explain whether the company should go ahead with the proposal. Show workings. (6 marks) Independent of Question 6b, suppose there is another new proposal by the production manager to reduce the fixed manufacturing costs by $140,000 and to reduce the variable manufacturing costs by 10% through improved production methods. Use CVP analysis to calculate the expected change in net income. Show workings. (6 marks)