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	(	18,000	units x $75)		$1,350,000
Less variable costs
Direct materials	(	18,000	units x $10)	$180,000
Direct labor	(	18,000	units x $10)	180,000
Variable factory overhead	(	18,000	units x $4)	72,000
Selling and administrative	(	18,000	units x $2)	36,000	(468,000)
Contribution margin	(	18,000	units x $49)		882,000
Less fixed costs
Factory overhead				540,000
Selling and administrative				360,000	(900,000)
Net income (loss)					$(18,000)

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 $18,000 per month. Answer Increase of decrease of $Answer b. Reducing the selling price by $5 per unit. This should increase the monthly sales by 4,500 units. At this higher volume, additional equipment and salaried personnel would be required. This will increase fixed factory overhead by $6,000 per month and fixed selling and administrative costs by $2,700 per month. Answer Increase of decrease of $Answer 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 $37,500 per month. Answer Increase ofDecrease of $Answer d. Increasing the unit selling price by $5 per unit. This action should result in a 3,000 unit decrease in monthly sales. AnswerIncrease ofDecrease of $Answer e. Combining alternatives (a) and (d). AnswerIncrease ofDecrease of $Answer