Variable Costing Income Statement and Effect on Income of Change in Operations Kombrelling manufactures three sires of utility tableswall (S), medium (M), and large (L). The income statement has consistently indicated and loss for the M , and management considering three proposals (1) continue Se M. (2) discontinue Sise Mand reduce total output accordingly.or () discontinue Se Mand conduct an advertising campaign to expand the sales of S S so that the entire plant capacity can continue to be used If Proposal 2 is selected and Se Mis discontinued and production curtailed, the annual feed production costs and find operating expenses could be reduced by $142.500 and $28.350 respectively. If Proposal selected, tisanticipated that an additional annual expenditure of $85,050 for the salary of an assistant brand manager (dewified as a fred operating expense) would yield an additional 130% in Se S sales volume. It is also assumed that the increased production of Sure would utilize the plant facilities released by the discontinuance of Swe 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 December 31, 2018 is as follows: Total $3.022.500 $990.000 $1.087.500 $945.000 $718.500 5567,000 350.000 $1,624,000 729.000 $538,500 241.000 5779,500 210.500 $1.006.500 $817,000 $2.603.000 1.000 $120.000 5419.500 Sales Cost of goods sold Variable costs Foed costs Total cost of goods sold Gross profit Operating expenses Variable expenses Fodenses Total operating expenses income from operations $100.750 5311.00 $116.100 32.125 $150.225 599 300 25 26 2751 1. Prepare an income statement for the past year in the variable conting format. Data for each style should be reported through contribution margin. The food costs should be deducted from the total contribution margin, as reported in the "Total column, to determine income from operations. Enter all amounts as positive numbers. Kombre Inc. Variable Costing Income Statement For the Year Ended December 31, 2018 Variable cost of goods sold Manufacturing margin il Variable operating expense Contribution margin Fed costs Manufacturing costs Operating expenses Total costs Income from operations c om c o uld be reduced be ne the amount by which total 2. Based on the income statement prepared in (1) and the other data presented above present level of Proposal 2 is accepted. 3. Prepare an income statement in the variable costing format, indicating the projected annual income from operations if Proposal is accepted. Data for each style should be reported through contribution margin. The food costs should be deducted from the total contribution margin as reported in the "Total column. For purposes of this problem, the additional expenditure of $85.050 for the assistant brand manager's salary can be added to the fixed operating expenses. Enter all amounts as positive numbers. Kimbrell Inc Variable Casting Income Statement For the Year Ended December 31, 2018 Total Sales Variable cost of goods sold Manufacturing margin Variable operating expenses Contribution margin Fixed costs: Manfacturing costs Operating expenses INTED Totecas Income from operation 4. By how much would total annual income increase above its present level