Wilsons Leather retails two products, a luggage carrier and a computer carrier. The expected level of sales is 200,000 units. Information pertaining is presented:

1. The luggage carrier has a selling price of $52 per unit; variable production costs are $40.

2. The computer carrier has a selling price of $44 per unit; variable production costs are $30.

3. Variable selling costs are $6 per unit for luggage carriers and $3 for computer carriers.

4. Fixed production costs total $1,000,000; fixed selling expense is $250,000.

5. The products are sold in a ratio of four luggage carriers to one computer carrier.

REQUIRED: SHOW ALL WORK!!!

1. Prepare a Gross Margin Income Statement.

2. Prepare a Contribution Margin Income Statement.

3. Calculate the breakeven point for Wilsons Leather in units and sales dollars.

4. If Wilsons Leather could change the mix from 4:1 to 3:2 by increasing advertising by $100,000, should the increased advertising campaign be undertaken? Why or why not. (Be sure to show calculations to support your answer.)