The Derby Shoe Company produces its famous shoe, the Divine Loafer, which sells for $70 per pair. The operating income for 2012 is as follows: Sales revenue ($70 per pair) $280,000 Variable cost ($30 per pair) $120,000 Contribution margin $160,000 Fixed cost $80,000 Operating income $80,000 MG523: Module 1 The Decision-Making Process and CVP Analysis 1.1 CVP Analysis 2 Derby Shoe Company would like to increase its profitability over the next year by at least 25%. To do so, the company is considering the following options: a. Replace a portion of its variable labor with an automated machining process. This would result in a 15% decrease in variable cost per unit, but a 10% increase in fixed costs. Sales would remain the same. b. Spend $20,000 on a new advertising campaign, which would increase sales by 40%. c. Increase both selling price by $10 per unit and variable costs by $8 per unit by using a higher quality leather material in the production of its shoes. The higher priced shoe would cause demand to drop by 15%. d. Add a second manufacturing facility, which would double Derbys fixed costs but would increase sales by 60%. Evaluate each of the alternatives considered by Derby Shoes. Do any of the options meet or exceed Derbys targeted increase in income of 25%? What should Derby do? Submission Requirements: Submit your response in a Microsoft Excel workbook. Show the detailed steps that you performed to solve the problem. Evaluation Criteria: The analysis will be evaluated using the Analysis rubric.