Use the Following Information to Answer Questions 1, 2 and 3.

Johnson Company is a merchandising firm. Next month the company expects to sell 650 units. The following data describe the company's revenue and cost structure:

Selling price per unit ... $50

Sales commission ............. 7%

Purchase price (cost) per unit $16

Advertising expense .......... $5,000 per month

Administrative expense ... $3,500 per month plus 12% of sales

Transportation out (freight) $3 per unit

Marketing expenses $2,500 per month

Assume that all activity mentioned in this problem is within the relevant range of 500 to 700 units.

1. The expected contribution margin next month is:

2. The expected gross margin (profit) is:

3. The expected net income next month is: (use the contribution approach to calculate net income):