The following information pertains to The Hershey Company for Hershey Bars for the month of October:

Number of cases produced and sold 70,000

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Selling Price $40 per case

Chocolate 630,000

Wages for assembly line workers 560,000

Home office expenses 422,000

Boxes 210,000

Rent for the factory 120,000

Sales Commission $5.00 per case

Required: (35 points)

A. Prepare a Contribution Income Statement for October in good form.

B. All scenarios are referenced to the above original data. Show calculations in a comparative contribution income statement.

1. The CEO believes that by using higher quality chocolate, which cost $2 per case more to make, the company could sell 20% more cases. Would this be a good decision?

2. The CEO believes that if the commission to the sales force is increased by $2 per case, the selling price is lowered by $1, and the home office expenses lowered by $70,000, the company can increase its sales volume by 30% and make more profit. Is the CEO correct?

3. A VP believes that if the selling price is raised by $3, the company would make more profit even if they sell 20% less units. Is the VP correct?