Exercise $20\mathrm{.}8($Static$)$ Using Cost$-$Volume$-$Profit Formulas $($LO$20-4,$ LO$20-5,$ LO$20-6)$

Arrow Products typically earns a contribution margin ratio of $32$ percent and has current fixed costs of $$1,640,000.$ Arrow's general manager is considering spending an additional $$100,000$ per year to do one of the following:

Start a new ad campaign that is expected to increase sales revenue by $4$ percent.

License a new computerized ordering system that is expected to increase Arrow's contribution margin ratio to $36$ percent.

Sales revenue for the coming year was initially forecast to equal $$6,400,000($that is$,$ without implementing either of the above options$).$

Required:

a$-1.$ Compute the projected operating income for each option?

a$-2.$ For each option, how much will projected operating income increase or decrease relative to initial predictions?

b$.$ By what percentage would sales revenue need to increase above the current level of $$6,400,000$ to make the ad campaign as attractive as the ordering system?

Complete this question by entering your answers in the tabs below.

Req A$1$

Compute the projected operating income for each option?

$\backslash$table$[[$Option$,\backslash$table$[[$Operating$],[$Income$]]],[$Ad campaign,$],[$Ordering system,$]]$