Sensitivity Analysis and Cost-Volume-Profit Crosby Inc. has just developed a new product called The Cruiser, with a variable manufacturing cost of $32 per unit. The marketing vice president has developed three marketing approaches to selling The Cruiser. Rank the three approaches, highest to lowest, in order of net contribution margin. Alternative: 1 Set a selling price of $38 and have the organization's sales persons sell The Cruiser at a 12% commission. There would be no advertising program. Estimated sales would be 12,000 units under this plan. 2 Set a selling price of $40 and have the organization's sales persons sell The Cruiser at a 10% commission. Develop a $35,000 multi-media advertising program. Estimated sales under plan 2 would be 14,000 units. 3 Rely on wholesalers to sell The Cruiser. Crosby would sell The Cruiser to the wholesaler at $34 per unit. There would be no advertising program. Estimated sales would be 16,000 units under this plan.13 14 Rank the three approaches, highest to lowest, in order of net contribution margin (show all of your work and use formulas where appropriate in the cells). 15 16 Crosby Inc. 17 CM Income Statement 18 The Cruiser 19 Alternative 1 Alternative 2 Alternative 3 20 Selling Price per unit 21 Variable costs per unit 22 Commissions per unit 23 Contribution Margin per unit S $ 24 Unit sales 25 Total Contribution Margin S $ $ 26 Advertising costs 27 Net Contribution Margin S S S 28 29 If alternative 3 is chosen based on net CM and the actual sales do not meet expectations by 20% how much should Crosby increase the selling price to the wholesaler to make $32,000 in CM? 30 Prove your answer by showing all of your work.9 If alternative 3 is chosen based on net CM and the actual sales do not meet expectations by 20% how much should Crosby increase the selling price to the wholesaler to make $32,000 in CM? Prove your answer by showing all of your work. New sales number New Selling Price Selling Price per unit VC per unit CM per unit $ $ Unit sales Total CM S 32,000 Difference in CM Difference in CM per unit #DIV/0! Increase selling price per unit by