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Pippa's Pilot Headware, Inc

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Pippa's Pilot Headware, Inc. produces pilot headware. Sales have been very erratic, with some months showing a profit and some moths showing a loss. The company's contribution format income statement for the most recent month is given below: Sales (15,000 units at $85 per unit) Variable expenses Contribution Margin Fixed expenses Net operating Income 1,275,000 840,000 435,000 270,000 165,000 Required: Refer to the original data. The president is convinced that a 20% increase in the selling price, combined with an increase of $45,000 in the monthly advertising budget will double unit sales. Prepare the new contribution format income statement if these changes are adopted.