4. Refer to the original data. The Marketing Department thinks that a fancy new package for the product would help sales. The new package would increase packaging costs by 75 cents per unit. Assuming no other changes, how many units would have to be sold eaclh month to earn a profit of $9,7502 Refer to the original data. By automating, the company could reduce variable expense by S3 per unit. However, fixed expenses would increase by $72,000 each month. Assuming that the company expects to sell 26,000 units next month, prepare two contribution format income statements, one assuming that operations are not automated and one assuming that they are. 5. NOT AUTOMATED Total Per Unit Percent of Sales Sales (26,000 units) Variable expenses Contribution margin Fixed expenses Net operating income AUTOMATED Total Per Unit Percent of Sales Sales (26,000 units) Variable expenses Contribution margin Fixed expenses Net operating income Computer the break-even point in both units sales and dollar sales for both the Not Automated and the Automated scenarios. a. Computer the margin of safety in units, dollars, and percentage for both the Not Automated and the Automated scenarios. b. Computer the degree of operating leverage for both the Not Automated and the Automated scenarios. c. the unit sales volume at which the net operating income is the same for either d. Compute method. (This would be 'the point of indifference' and it is computed by taking the difference in the fixed expenses and dividing it by the difference in the variable expenses per unit.) Would you recommend that the company automate its operations? Explain. e. 4. Refer to the original data. The Marketing Department thinks that a fancy new package for the product would help sales. The new package would increase packaging costs by 75 cents per unit. Assuming no other changes, how many units would have to be sold eaclh month to earn a profit of $9,7502 Refer to the original data. By automating, the company could reduce variable expense by S3 per unit. However, fixed expenses would increase by $72,000 each month. Assuming that the company expects to sell 26,000 units next month, prepare two contribution format income statements, one assuming that operations are not automated and one assuming that they are. 5. NOT AUTOMATED Total Per Unit Percent of Sales Sales (26,000 units) Variable expenses Contribution margin Fixed expenses Net operating income AUTOMATED Total Per Unit Percent of Sales Sales (26,000 units) Variable expenses Contribution margin Fixed expenses Net operating income Computer the break-even point in both units sales and dollar sales for both the Not Automated and the Automated scenarios. a. Computer the margin of safety in units, dollars, and percentage for both the Not Automated and the Automated scenarios. b. Computer the degree of operating leverage for both the Not Automated and the Automated scenarios. c. the unit sales volume at which the net operating income is the same for either d. Compute method. (This would be 'the point of indifference' and it is computed by taking the difference in the fixed expenses and dividing it by the difference in the variable expenses per unit.) Would you recommend that the company automate its operations? Explain. e
