. Direct Contribution Margins. Zehnder Company, a Swiss firm, sells three products. Financial data for a typical month are (in thousands of Swiss francs):

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1. The firm is considering the introduction of a new Product \(M\) to replace Product J. Product M sells for SFr12 per unit, has variable costs of SFr5 per unit, and has separable fixed costs of SFr 104,000 . How many units of Product M must be sold to maintain the existing income of SFr280,000?
2. Revenues of Product \(\mathrm{K}\) could increase by 20 percent by reducing variable contribution margin to 45 percent and increasing separable and avoidable fixed costs by SFr 40,000 . Should Zehnder do this? Show your logic.
3. Rank each product by total sales, variable contribution margin percentage, direct contribution margin percentage, and net profit percentage. Comment on how Zehnder might use each ranking.

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Products K L Total Sales.... SFr 300 Variable costs 90 SFr 500 200 SFr 800 SFr1,600 400 690 Contribution margin SFr 210 SFr 300 SFr 400 SFr 910 Fixed costs: Separable and avoidable..... SFr 90 SFr 100 SFr 120 SFr 310 Joint, allocated on sales dollar basis.. 60 100 160 320 Total fixed costs SFr 150 SFr 200 SFr 280 SFr 630 Profit SFr 60 SFr 100 SFr 120 SFr 280