ABC Company is considering changing its cost structure by investing in automation which means acquiring computer-controlled robots and reducing the labor force. Data for the current environment and the new automated environment are as follows:

ABC Company is considering changing its cost structure by investing in automation which means acquiring computer-controlled robots and reducing the labor force. Data for the current environment and the new automated environment are as follows: Current New Unit variable cost Material 1.8 1.25 Labor 1.6 0.18 Total per unit 3.4 1.43 Monthly fixed costs Rent and amortization 725000 1550000 Supervisory labor 128000 128000 Other 75000 150000 Total per month 928000 1828000 Expected volume 780000 units Capacity volume 1200000 units Sale price per unit 5.5 Required: Compute the budgeted profit at the expected volume under both current and new environments. Compute the budgeted profit for both current and new environments if volume of sales falls to: Compute the budgeted profit for both current and new environments if volume of sales increases to: Describe the cost structure characteristics of the current and new operation environment. Comment on the riskiness of the new operation environment versus the old environment