CVP Sensitivity Analysis (Multiple Products). Dolomite Company produces two different products that have the following annual data (this is the base case):

	Classic	Modern	Total
Sales price/unit	$200	$100
Variable Cost/unit	$120	$50
Expected Unit Sales	5000	20,000	25,000
Sales Mix	20%	80%	100%
Fixed Costs			1,000,000

Required:

For each of the independent situations in requirements b through d, assume that total sales remain at 25,000 units.

1. Prepare a contribution margin income statement for the base case.
2. Refer to the base case. What would the operating profit be if the Modern sales price (1) increases 10 percent, or (2) decreases 10 percent?
3. Refer to the base case. What would the operating profit be if Classic sales volume decreases 500 units and there is a corresponding increase of 500 units in Modern sales?
4. Refer to the base case. What would the operating profit be if total fixed costs decrease 10 percent? Does this decrease in fixed costs result in higher operating leverage or lower operating leverage? Explain.