Determine net operating income in the three scenarios. When preparing the 3 income statements, the starting point is the original information provided in the Base Scenario.

Scenario 1: Invest in Machine with $60,000 fixed charge; Reduce Variable Cost per unit by $9 per unit.

Scenario 2: Reduce Variable Cost $3 per Unit; Keep Sales at Base Level.

Scenario 3: Increase Marketing Budget for TV advertisements by $15,000; Reduce Sale Price Per Unit by $1; Get 5,000 More Sales.

  

Base Scenario Current Model Scenario #1 Scenario #2 Scenario #3 Invest in Machine with $60,000 fixed charge; Reduce Variable Cost per unit by $9 per unit; Reduce Variable Cost $3 per Unit; Keep Sales at Base Level Increase Marketing Budget for TV advertisements by $15,000; Reduce Sale Price Per Unit by $1; Get 5,000 More Sales Number of Units sold Sales Variable Expenses Contribution Margin Fixed Expenses Net Operating Income Number of Units Sold Sales Variable Expenses Contribution Margin Fixed Expenses Net Operating Income Number of Units Sold Sales Variable Expenses Contribution Margin Fixed Expenses Net Operating Income Number of Units Sold Sales Variable Expenses Contribution Margin Fixed Expenses Net Operating Income 10,000 10,000 10,000 15,000 $ $ $ $ $ TOTAL PER UNIT 350,000 $ 245,000 $ 105,000 $ 50,000 55,000 TOTAL 35.00 24.50 10.50 PER UNIT TOTAL PER UNIT TOTAL PER UNIT