Required:

Currently, all store managers have contracts calling for a bonus of $25$ cents per gallon for each gallon sold beyond the break$-$even point. Compute the number of gallons of ice cream that must be sold per month in order to earn a monthly operating income of $$20,000($round to the next gallon$).$

To increase operating income, the company is considering the following two alternatives:

a$.$ Reduce the selling price by an average of $$2\mathrm{.}30$ per gallon. This action is expected to increase the number of gallons sold by $25$ percent. $($Under this plan, the manager would be paid their salary without a bonus.$)$

b$.$ Spend $$4,200$ per month on advertising without any change in selling price. This action is expected to increase the number of gallons sold by $10$ percent. $($Under this plan, the manager would be paid their salary without a bonus$).$

Draft a memo to management indicating your recommendation with respect to these alternative marketing strategies. The memo should include supporting evidence for your recommendations. Also, compare the possible strategies to what the company is currently doing.