Sierra Corporation produces and sells a single product. The following table provides the data concerning the per unit selling price and per unit variable cost of the product.
	Per Unit
Selling price	$ 395.00
Variable cost	$ 276.00
The Fixed expenses for Sierra Corporation are currently $1,200,000 per year. The company is currently selling 15,000 units per year.
The past few months sales and net income have not been at an acceptable level for the CEO. The CEO has asked for a proposal from the V.P.of Sales to increase the sales and the profitability of the company for the upcoming fiscal year. The V.P. of Sales has made the following proposal:
1. Decrease the selling price by $15 per unit.
2. Start paying a $12 commission to the sales people for each unit sold.
3. As an offset to the commissions that would start being paid, the total fixed salaries paid the sales people will be decreased by $200,000 per year.
4. Increase the annual advertising expense by $100,000.
5. Under this proposal monthly units sold will increase by 20%.
Required:
1. Prepare the Current Contribution Margin Income Statement.
2. Prepare a Revised Contribution Margin Income Statement if the proposal by the V.P. of Sales is implemented.
3. Calculate the Breakeven Point in Sales Units and Sales Dollars for both the Current and the Revised.
4. State whether the proposal by the V.P of Sales should be implemented.