Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $80 per unit. Variable expenses are $40.00 per unit, and fixed expenses total $200,000 per year.
Refer to the original data. Assume that the company sold 34,500 units last year. The sales manager is convinced that a 15% reduction in the selling price, combined with a $78,000 increase in advertising, would increase annual unit sales by 50%.
a.Prepare two contribution format income statements, one showing the results of last year's operations and one showing the results of operations if these changes are made. (Do not round intermediate calculations. Round your "Per unit" answers to 2 decimal places.)