Stratford Company distributes a lightweight lawn chair that sells for $120 per unit. Variable expenses are $60.00 per unit, and fixed expenses total $160,000 annually.

The president expects sales to increase by 12% next year. By how much should net operating income increase? (Round your intermediate calculations to 2 decimal places and final answer to the nearest dollar amount.)

Refer to the original data. Assume that the company sold 45,000 units last year. The sales manager is convinced that a 14% reduction in the selling price, combined with a $76,000 increase in advertising expenditures, would increase annual unit sales by 50%.

a.	Prepare two contribution format income statements, one showing the results of last year