Solve the last alternative

Informal Seating Company is currently selling 1,000 oversized bean bag chairs a month at a price of $75 per chair. The variable cost of each chair sold includes $30 to purchase the bean bag chairs from suppliers and a S8 sales commission. Fixed costs are $8,000 per month. The company is considering making several operational changes and wants to know how the change will impact its operating income. Read the requirements. Requirement 1. Prepare the company's current contribution margin income statement. (Use parentheses or a minus sign for an operating loss.) Informal Seating Company Contribution Margin Income Statement Sales revenue S 75,000 Variable expenses $ 30,000 8,000 Cost of goods sold Operating expenses Contribution margin Fixed expenses Operating income (loss) 38,000 37,000 8,000 S 29,000 Requirement 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. Alte native 1: The company believes volume will increase by 16% f salespeople are paid a commission o 13% o the sales p ce rather than the current $8 per unit. Use parentheses or a minus sign or an operating loss. Requirement 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 : The company believes volume Informal Seating Company Contribution Margin Income Statement ill increase by 6% salespeople are paid a commission o 13% o the sales pr rather an e current $8 per unit se parentheses ra minus gn or an operating s Sales revenue $ 87,000 Variable expenses: Cost of goods sold 34,800 11,310 Operating expenses Contribution margin Fixed expenses Operating income (loss) Operating income from implementing these changes would 46,110 40,890 8,000 $ 32,890 crase by 3,890 from Requirement1 b. Alternative 2: The company believes that spending an additional $6,000 on advertising would increase sales volume by 8%. (Use parentheses or a minus sign for an operating loss.) Informal Seating Company Contribution Margin Income Statement Sales revenue $ 81,000 Variable expenses: Cost of goods sold S 32,400 41,040 39,960 14,000 $ 25,960 8,640 Operating expenses Contribution margin Fixed expenses Operating income (loss) Operating income from implementing these changes would decrease bys 3,040 from Requirement 1. c. Alternative 3: The company is considering raising the selling price to S89, but believes volume would drop by 10% as a result. Use parentheses or a minus sign for an operating loss. c Alternative 3: The company is considering raising the selling pnce to $89 but believes volume would drop by 10% as a result. Use parentheses or a minus sign for an operating loss. Informal Seating Company Contribution Margin Income Statement Sales revenue Variable expenses Cost of goods sold Operating expenses Contribution margin Fixed expenses Operating income (loss)