Softway. Inc.. was started by two young software engineers to market AdBlocker, a software application they had written that blocks ads when surfing the Internet. Sales of the software have been good at 20,400 units a month, but the company has been losing money as shown below: Sales (20,400 units * S18.98 per unit) S 387,192 Variable cost (20,400 units * $5.80 per unit) 118,320 Contribution margin 268,872 Fixed expenses 254,800 Net operating income (loss) $ 14.072 The company's only variable cost is the $5.80 fee it pays to another company to reproduce the software on CDs, print manuals, and package the result in an attractive box for sale to consumers. Monthly fixed selling and administrative expenses are $254,800. The company's marketing manager has been arguing for some time that the software is priced too high. She estimates that every 10% decrease in price will yield a 20% increase in unit sales. The marketing manager would like your help in preparing a presentation to the company's owners concerning the pricing issue. Required: 1. To help the marketing manager prepare for her presentation, she has asked you to fil in the blanks in the following table. The selling prices in the table were computed by successively decreasing the selling price by 10%. The estimated unit sales were computed by successively increasing the unit sales by 20%. For example, $17.08 is 10% less than $18.98and 24,480 units are 20% more than 20,400 units. 3a. Compute the price elasticity of demand for the AdBlocker software 3b. Based on your calculations in Requirement 3a. what is the profit-maximizing price? 4a. The owners have invested $120,300 in the company and feel that they should be earning at least 4% per month on these funds. If the absorption costing approach to pricing were used, what would be the target selling price based on the current sales of 20.400 units?4b. What do you think would happen to the net operating income ofthe company if this price were charged? The Company's net operating income would 5a. If the owners of the company are dissatisfied with the net operating income and return on investment at the selling price you computed in (3) above, should they increase the selling price? Yes No 5b. Which ofthe following steps should the owners take to increase net operating income? Decrease product costs Increase perceived value of product Increase selling costs Increase wastages