[The following information applies to the questions displayed befow] Alberta Gauge Company, Limited, a small manufacturing company in Calgary, Alberta, manufactures three types of electrical gauges used in a variety of machinery. For many years the company has been profitable and has operated at capacity. However, in the last two years, prices on all gauges were reduced and selling expenses increased to meet competition and keep the plant operating at capacity. Second-quarter resuits for the current year, which follow, typify recent experience. - Alice Carlo, the company's president, is concerned about the tesults of the pricing, selling, and production prices. After reviewing the second-quarter results, she asked her management staff to consider the following three suggestions: - Discontinue the R-gauge line immediately R-gauges would not be returned to the product line unless the problems wh the gauge can be identified and resolved. - Increase quarterly sales promotion by $125,000 on the Q-gauge product line in order to increase sales volume by 15 percent - Cut production on the E-gauge line by 50 percent, and cut the traceable advertising and promotion for this line to $30,000 each quarter. - Discontinue the R-gauge line immediately. R-gauges would not be returned to the product line unless the problems with the gauge can be identified and resolved. - Increase quarterly sales promotion by $125,000 on the Q-gauge product line in order to increase sales volume by 15 percent. - Cut production on the E-gauge line by 50 percent, and cut the traceable advertising and promotion for this line to $30,000 each quarter. Jason Sperry, the controller, suggested a more careful study of the financial relationships to determine the possible eifects on the company's operating results of the president's proposed course of action. The president agreed and assigned JoAnn Brower, the assistant controller, to prepare an analysis. Brower has gathered the following information. - All three gauges are manufactured with common equipment and facilties - The selling and administrative expense is allocated to the three gauge lines based on average sales volume over the past three years. - Special selling expenses (primanly advertising, promotion, and shipping) De ineurred for each gauge as follows - The unit manufacturing costs for the three products are as follows: MODULE 3 : Chapter 14 Part 1 GRADED - Required 0 Heip 11 - The company is manufacturing at capocity and is selling at the gaupes it produces Pant 1 at 2 25 borns abica melerions. 2. Use the operating data pcesented for Aberta Gauge Company and assume that the president s proposed course of action had been implemented at the beginning of the second quarter e. Calculate the net impact on income before taxes for each of the three suggestions b-1. Calculate contribution margin for P gauge b-2. Was the presudent correct in proposing that the R-gaupe line be eliminated? e-1. Caiculate the contribution per difect Aboor dollar for Q-gavge and E-gauge. c2 Was the presudent correct in promoting the Q-gaupe line rather than the E-gaubt ine? Complete this question by entering your answers in the tabs below. Cakulate the net impoct en inceme before taves for each of the threet suggestions. nait thes vint