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3. Percys Porcelain Works manufactures fine vases. The company produces two designs: a square and a round vase. The planning team is discussing the coming years activities. To start the discussion, the company controller and the marketing manager have provided the following information on costs and revenues Total expected sales of both products combined 40,000 Square Round $ 25 Selling price (per vase) Less: variable costs (per vase) Direct materials Direct labour 45 Selling Contribution margin (per vase) Percentage of total unit sales Total contribution margin Fixed manufacturing costs Fixed selling and administrative 70% 30% $348,000 $ 712,000 200,000 $364000 expense Operating income 160,000 $ 352,000 The planning team would like to increase operating income by focusing on the round model. To do this, they plan to increase advertising by $200,000 and sales commissions per round vase by $1. The team expects that this will increase sales to a total of 47,000 vases, and increase the sales of round vases from 30% to 40% of the sales mix. What will be the new net operating income if these changes are implemented and the sales are as predicted? a) $262,500 b) $333,000 C) $351,800 d) $533,000

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