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Kelly Companys most recent contribution format income statement is shown below:

	Total			Per Unit
Sales (50,000 units)	$	700,000		$	14
Variable costs		300,000			6
Contribution margin		400,000		$	8
Fixed costs		240,000
Operating income	$	160,000

Required:

Prepare a new contribution format income statement with a per unit column under each of the following conditions (consider each case independently):

1. The selling price increases by $1 per unit, fixed costs increase by $20,000, and the number of units sold decreases by 10%. Would this change be beneficial to the company? Briefly explain. ( 4 marks)

2. Return to the original data. Variable costs increase by 60 cents per unit, the selling price increases by 15%, and the number of units sold decreases by 15%. Would this change be beneficial to the company? Briefly explain. ( 4 marks)

3. Return to the original data. The selling price decreases by $2 per unit, fixed costs decrease by $30,000, and the variable costs per unit increases by 10%. Would this change be beneficial to the company? Briefly explain. ( 4 marks)

4. Return to the original data. The number of units sold decreases by 5%, fixed costs increase by 10%, and the variable costs per unit decreases by $4 per unit. Would this change be beneficial to the company? Briefly explain. ( 4 marks)

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