Stratford Company distributes a lightweight lawn chair that sells for $80 per unit. Variable expenses are $40.00 per unit, and fixed expenses total $200,000 annually.
Refer to the original data. Assume that the company sold 36,000 units last year. The sales manager is convinced that a 10% reduction in the selling price, combined with a $69,000 increase in advertising expenditures, 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 what the results of operations would be if these changes were made. (Input all amounts as positive values except losses which should be indicated by minus sign. Do not round intermediate calculations. Round proposed units to the nearest whole number. Round your "Per unit" answers to 2 decimal places.)