PARAMETERS FOR BASELINE CASE

The following numbers are estimates for the upcoming year for a manufacturing company.

Since the company is effective at implementing a JIT inventory system, assume there is

no beginning or ending inventory.

Make CVP Calculations for the Baseline Case

$($a$)$ Prepare a contribution margin income statement $($also called a variable$-$costing income statement$)$ for the manufacturing company for the upcoming year.

$($b$)$ Compute the company$$s contribution margin per unit and

contribution margin percentage for the upcoming year.

$($c$)$ Calculate the company$$s breakeven point in units for the upcoming year

$($d$)$ Calculate the company$$s breakeven point in sales dollars for the upcoming year.

Complete Four Scenarios $($What$-$if Analyses$)$

$($e$)$ Put all personnel on commission. This action would affect the sales salaries and commissions expense by eliminating the fixed portion and increasing the variable portion by $$4\mathrm{.}50$ per unit. Sales would increase by $40,000$ units.

$($f$)$ Redesign the package for the product. This would decrease the variable direct materials cost by $$1\mathrm{.}50$ per unit but would increase the fixed factory overhead by $$36,000.$

$($g$)$ Launch a new advertising campaign. This would increase fixed advertising expense by $$326,000$ but would increase sales volume by $4,500$ units.

$($h$)$ Reduce the selling price of the product by $$12\mathrm{.}00$ per unit. This would increase sales volume by $14,600$ units.

$($i$)$ Write a memo, explaining whether the company should use any of the suggestions, and make recommendation about which suggestion is the optimal