whats the budgeted operating statement using contribution margin for ii. confused by number in response 1

Cost Profit Volume anaysis The operating statement relating to the latest financial year of Pristine Manufacturing Limited is as follows: '000 '000 3,300 Sales (22,000 units) Direct materials Direct labour Production overheads 726 374 798 1,898 Gross profit Selling overheads Net profit 1,402 1,042 360 The variable production overheads were 9 per unit while the variable selling overheads were 11 per unit b) The company has a capacity of 30,000 units per year. Management is not happy with the financial performance for the last year, and two courses of action for the coming year were proposed in the recent management meeting. 0 The sales manager believed that sales volumes would increase by 30% if an additional 200,000 is spent on advertising, (1) The general manager considered that full capacity could be reached if the selling price was to be cut by 10%. In addition, the direct material cost would be reduced by 5% following a minor modification of the specification of the product Prepare the budgeted operating statement for the coming year, using a contribution margin approach, under each alternative. 15 marks