Multiple Changes in Profit Plans In an attempt to improve profit performance, Anderson Company's 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) Less variable costs Dinka makirisk ( 13,200 units x $16) $132,080 ( 13,200 units x $16) 132,080 Variable factory overhead ( 13,200 units x 34) 52, 800 Selling and administration ( 13,200 units x $2) 26,400 (343,200) Contribution margin ( 13,200 units x 147) 645.300 Less frond cost Factory ewarhead 306,080 Selling and administratm 364,080 4560,0001 Net income doesj 4(13,2001 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. Increase of = w $ 26,400 6. 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. Increase of = w $ 59,620 c. Buying rather than manufacturing a component of Anderson's 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 dedine $27,500 per month. Increase of = $ 14,300 d. Increasing the unit selling price by $5 per unit. This action should result in a 2,200 unit decrease in monthly sales. Decrease of = * $ 110,000 e. Combining alternatives (a] and (d). Decrease of = w $ 46,200