Appendix Three (Cost-Volume-Profit Analysis) Objective: With the new plant in operation, what would be the production level necessary to maintain Net Operating Income at a level similar to a competitor of WTB. Scenario: cC researched and came up with the contribution margin Income Statement of a competitor, Sunshine Inc. The contribution margin Income Statement is prepared for a sales volume of 60,000 units Methodology: The consulting group projects that since WTB's plant will be automated, it will increase contribution margin per unit by 50% and fixed expenses by 40%. The increase in contribution margin will be due to production efficiencies which will reduce variable expenses, while total revenue and number of units sold remaining unchanged from the above scenario. Under assumption that the same number of products are manufactured and sold as in the above scenario, the group will develop a new Contribution Margin Income Statement, new breakeven sales in units and calculate the degree of operating leverage. Based on the above calculation, they would advise regarding the risk level of this scenario (high