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Pack It In, Pack It Out, Inc. is a merchandiser of sleeping bags. The company currently sells two types of bags: back yard and back country. Information related to each product line for the company's most recent month of operations is below:

	back yard	back country
sales price	$155	$250
CM%	60%	70%
unit fixed costs*	$40	$40
monthly sales volume	80 bags	65 bags

*based on monthly sales volume

The company is under pressure from its owners to increase its operating income by $2,500 next month.

The sales staff for both product lines is doubtful that the products' current customer bases would accept a price increase. The sales volume for the back yard product line is currently at the highest level possible. However, the sales staff is confident that the sales volume could increase for the back country product line if the company spends $1,000 on an aggressive advertising campaign.

All

other current costs for both product lines are at the lowest level possible.

Given the above information, what of the following is a viable option for increasing operating income by $2,500 next month?

A.

Increase the sales volume of the back yard product line by 47 bags. Make no other changes.

B.

Increase the sales volume of the back country product line by 20 bags. Make no other changes.

C.

Decrease the unit variable cost of the back yard product line to $30.75. Make no other changes.

D.

Increase the sales price of the back country product line by approximately $38. Make no other changes.

E.

More than one of the above is a viable option.

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