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Marketing, distribution, and customer-service costs $ 30,000 Merchandise inventory, January 1, 2013 25,000 Utilities 10,000 General and administrative costs 42,000 Merchandise inventory, December 31, 2013 38,000 Purchases 156,000 Miscellaneous costs 6,000 Transportation-in 8,000 Purchase returns and allowances 5.000 Purchase discounts 9.000 Revenues 295,000 Replace a portion of its variable labor with an automated machining process, This would result in a 15% decrease in variable cost per unit, but a 10% increase in fixed costs. Sates would remain the same. Spend $20.000 on a new advertising campaign, which would increase sales by 40%. Increase both selling price by $10 per unit and variable costs by $8 per unit by using a higher quality leather material in the production of its shoes. The higher priced shoe would cause demand to drop by 15%. Add a second manufacturing facility, which would double Derby's fixed costs but would increase sales by 60%. The Derby Shoe Company produces its famous shoe, the Divine Loafer that sells for $70 per pair. Operating income for 2012 is as follows: (Click the icon to view the income statement.) Derby Shoe Company would like to increase its profitability over the next year by at least 25%. To do so, the company is considering the following options: (Click the icon to view the options.) Requirement Evaluate each of the alternatives considered by Derby Shoes Do any of the options meet or exceed Derby's targeted increase in income of 25%. What should Derby do? (Use parentheses or a minus sign for an operating loss.)

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