Squeaky-Clean Products is concerned about the profitability of its product line a shower massager. A new competitor has entered the market and Squeaky-Clean is worried about losing market share. Sales projections for 2019 are 60,000 units at a selling price of $ 25 per unit. At this level of sales, variable costs are $ 900,000 and fixed costs are $ 6 per unit.

Ima Sails, Vice President of Marketing, has prepared the following marketing plans:

Plan 1: increase selling price to $ 29; expected sales decline to 48,000 units

Plan 2: increase the selling to $ 27; reduce variable costs by $ 1; demand drops to 52,000 units; advertising, a fixed cost, increases $ 25,000

Plan 3: reduce the selling price to $ 21; reduce variable costs by $ 2; sales of 85,000 units are expected; reduce fixed costs by $ 15,000

Mr. I.B.A. Titewad, the CEO, has asked you to analyze each plan. Based on your analysis, what is your recommendation?

(Hint: find the impact on operating income (i.e., profit) for each plan; compare each with the current situation; report these numbers and decide which is best.