Multiple Changes in Profit Plans In an attempt to improve profit performance, Anderson Companys management is considering a number of alternative actions. An October contribution income statement for Anderson Company follows.

ANDERSON COMPANY
Contribution Income Statement
For Month of October
Sales	( 13,200 units x $75)		$990,000
Less variable costs
Direct materials	( 13,200 units x $10)	$132,000
Direct labor	( 13,200 units x $10)	132,000
Variable factory overhead	( 13,200 units x $4)	52,800
Selling and administrative	( 13,200 units x $2)	26,400	(343,200)
Contribution margin	( 13,200 units x $49)		646,800
Less fixed costs
Factory overhead		396,000
Selling and administrative		264,000	(660,000)
Net income (loss)			$(13,200)

Required Determine the effect of each of the following independent situations on monthly profit. Note: Do not use negative signs with your answers. a. Purchasing automated assembly equipment, which should reduce direct labor costs by $4 per unit and increase variable overhead costs by $1 per unit and fixed factory overhead by $13,200 per month. Answer Increase of Decrease of $_____ b. Reducing the selling price by $5 per unit. This should increase the monthly sales by 3,300 units. At this higher volume, additional equipment and salaried personnel would be required. This will increase fixed factory overhead by $4,400 per month and fixed selling and administrative costs by $1,980 per month. Answer Increase of Decrease of $______ c. Buying rather than manufacturing a component of Andersons final product. This will increase direct materials costs by $5 per unit. However, direct labor will decline $3 per unit, variable factory overhead will decline $1 per unit, and fixed factory overhead will decline $27,500 per month. Answer Increase of Decrease of $_____ d. Increasing the unit selling price by $5 per unit. This action should result in a 2,200 unit decrease in monthly sales. Answer Increase of decrease of $______ e. Combining alternatives (a) and (d). Answer Increase or Decrease of $_____