Valdespin Company manufactures three sizes of camping tentssmall (S), medium (M), and large (L). The income statement has consistently indicated a net loss for the M size, and management is considering three proposals: (1) continue Size M, (2) discontinue Size M and reduce total output accordingly, or (3) discontinue Size M and conduct an advertising campaign to expand the sales of Size S so that the entire plant capacity can continue to be used.

If Proposal 2 is selected and Size M is discontinued and production curtailed, the annual fixed production costs and fixed operating expenses could be reduced by $46,080 and $32,240, respectively. If Proposal 3 is selected, it is anticipated that an additional annual expenditure of $34,560 for the rental of additional warehouse space would yield an additional 130% in Size S sales volume. It is also assumed that the increased production of Size S would utilize the plant facilities released by the discontinuance of Size M.

The sales and costs have been relatively stable over the past few years, and they are expected to remain so for the foreseeable future. The income statement for the past year ended June 30, 20Y9, is as follows:

2 Sales 3 Cost of goods sold: 4 Variable costs 5 Fixed costs 6 Total cost of goods sold 7 Gross prot 8 Operating expenses: 9 Variable expenses 10 Fixed expenses 11 Total operating expenses 12 Income from operations Size S $668,000.00 $300,000.00 74,880.00 $374,880.00 $293,120.00 $132,480.00 92,160.00 $224,640.00 $68,480.00 Size M $737,300.00 $357,120.00 138,250.00 $495,370.00 $241,930.00 $155,500.00 103,680.00 $259,180.00 $07,250.00) Size L $956,160.00 $437,760.00 172,800.00 $610,560.00 $345,600.00 $195,840.00 115,200.00 $311,040.00 $34,560.00 Total $2,361,460.00 $1,094,880.00 385,930.00 $1,480,810.00 $880,650.00 $483,820.00 311,040.00 $794,860.00 $85,790.00 Variable Costing Income Statement - Proposal 3 3. Prepare an income statement in the ven'able costing format, indicating the projected annual income from operations it Proposal 3 is awepted. Data for each style should be reported through nontribution margin. The xed nests should be deducted from the total oontn'bution margin as reported in the \"Total\" column. For purposes of this problem, the expenditure of $34,560 for the rental of additional warehouse space can be added to the med operating expenses. Refer to the lists a! Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. A colon (.9 will automatically appear if it is required. Enter all amounts as positive numbers, Valdespin Company Varlaole Costlng Income Statement For the Year Ended June 30, 20Y9 1 Sales 3 Variable [OSt of goods sold 4 Manufacturing margin 5 Variable operating expenses 6 Contribution margin 7 Fixed costs: 3 Manufacturing costs 9 Operating expenses 10 Total xed costs 11 Income from operations Size S Size L $956,160.00 437,760.00 $512,400.00 195,340.00 $321 560 00 Total