Total variable expenses Contribution margin Fixed expenses Insurance Utilities Advertising Total fixed expenses Operating income Total Per unit Sales Variable expenses Cost of goods sold Shipping Advertising Wages Total variable expenses v Contribution margin Fixed expenses Insurance $ 37500 15000 1650 1200 15150 $ 12.5 .55 585 Just after Blake completed an income projection for 2,200 stuffed mascots, his supplier called to inform him of a 10% increase in cost of goods sold, effective immediately. Blake knows that he cannot pass the entire increase on to his customers, but thinks he can pass on half of the 10% increase while suffering only a 10% decrease in units sold. Calculate the operating income? (Round per unit to 2 decimal places and final answers to 0 decimal places, e.g. 5,275.) New projection with sales price increase $ New projection without sales price increase $ Should Blake respond to the increase in cost of goods sold with an increase in price? eTextbook and Media "I'll never understand this accounting stuff," Blake Dunn yelled, waving the income statement he had just received from his accountant in the morning mail. "Last month, we sold 2,000 stuffed State University mascots and earned \$6,565 in operating income. This month, when we sold 3,000 I thought we'd make $9,848. But this income statement shows an operating income of $11,615 ! How can I ever make plans if I can't predict my income? I'm going to give Janice one last chance to explain this to me," he declared as he picked up the phone to call Janice Miller, his accountant. "Will you try to explain this operating income thing to me one more time?" Blake asked Janice. "After I saw last month's income statement, I thought each mascot we sold generated \$3.28 in net income; now this month, each one generates $3.87 ! There was no change in the cost we paid for each mascot, so I don't understand how this happened. If I had known I was going to have \$11,615 in operating income, I would have looked more seriously at adding to our product line." Taking a deep breath, Janice replied, "Sure, Blake. I'd be happy to explain how you made so much more operating income than you were expecting