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	(	10,800	units x $75)		$810,000
Less variable costs
Direct materials	(	10,800	units x $10)	$108,000
Direct labor	(	10,800	units x $10)	108,000
Variable factory overhead	(	10,800	units x $4)	43,200
Selling and administrative	(	10,800	units x $2)	21,600	(280,800)
Contribution margin	(	10,800	units x $49)		529,200
Less fixed costs
Factory overhead				324,000
Selling and administrative				216,000	(540,000)
Net income (loss)					$(10,800)

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 $10,800 per month. b. Reducing the selling price by $5 per unit. This should increase the monthly sales by 2,700 units. At this higher volume, additional equipment and salaried personnel would be required. This will increase fixed factory overhead by $3,600 per month and fixed selling and administrative costs by $1,620 per month. 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 $22,500 per month. d. Increasing the unit selling price by $5 per unit. This action should result in a 1,800 unit decrease in monthly sales. e. Combining alternatives (a) and (d).