Universal Sports Exchange has just received notice from C&C Sports that the price of a baseball jersey will be increasing to $22.50 next year. In response to this increase, Universal is planning its sales and marketing campaign for the coming year. Managers have developed two possible plans and have asked you to evaluate them. The first plan calls for passing on the entire $0.50 cost increase to customers through an increase in the sales price. Managers believe that $20,000 in additional advertising targeted directly to current customers will allow the sales force to reach the current year's sales volume of 54.000 jerseys. The second plan relies on a new advertising campaign that focuses on the sales price remaining the same as last year. The campaign would include a new database that offers more potential customers than Universal has had access to in the past. The cost of the campaign is expected to be $25,000. Managers believe that the campaign will be more successful in generating new sales than the current incentive-based sales and marketing plan. As a result, they want to reduce the sales commission from 5% to 3% of sales and increase sales salaries by $35,000. The campaign is expected to generate an additional 10% in sales volume. UNIVERSAL SPORTS EXCHANGE Income Statement for the 52 Weeks Ended Janauary 30, 2021 Per Unit Ratio Sales $1,620,000 $30.00 100% Less: Variable expenses Cost of goods sold $1,188,000 22.00 73% Sales commissions 81,000 1.50 5% Tags 27,000 0.50 2% Total variable expenses 1,296,000 24.00 80% Contribution margin 324,000 $6.00 20% Less: Fixed expenses Selling 145,000 Administrative 95,000 Total fixed expenses 240,000 Operating income $84,000 (a) Your answer is correct. How much would operating income decrease if Universal did nothing to recover the increase in cost of goods sold, all other things equal? (Round intermediate calculations to 2 decimal places, e.g. 0.38 and final answer to 0 decimal places, e.g. 5,275.) Decrease in operating income $ 27000 (b) Determine the expected operating income under each proposed sales and marketing plan. (Round intermediate calculations to 2 decimal places, e.g. 0.38 and final answers to 0 decimal places, e.g. 5,275.) Alternative 1 Alternative 2 The expected operating income $ $ $