AW Inc. is a cabinet-making operation. Last year, sales volume totalled 850, 000. Volume for the first five months totalled 600,000 and sales were expected to be 1.6 million for the entire year. AW Inc. currently offers 2 different quality grades of cabinets: Grade I and Grade II. The average unit selling prices, unit variable costs, and direct fixed costs are as follows: Grade 1--> Unit Price: 3400 Unit Variable Cost: 2686 Direct Fixed Cost: 95,000 Grade 2--> Unit Price: 1600 Unit Variable Cost: 1328 Direct Fixed Cost: 95,000 Common fixed costs (not traceable to either cabinet) are 35,000. For every 3 Grade 1 cabinets sold, 7 Grade II cabinets are sold -- 1. If computer- controlled machines are purchased, variable costs for each type of cabinet will decrease by 9%, but common fixed costs will increase by $44,000. Assume machines are purchased at the beginning of the 6th month. Fixed costs are incurred uniformly throughout the year. a) What is the effect on operating income? b)What is the new break even point? 2. Refer to the original data. AW Inct. is adding a retail outlet that will increase common fixed costs by 70,000/year. Adding the retail outlet will cause the sales mix ratio to change to 1:1. The retail outlet is also expected to increase sales by 30%. Assume the outlet is opened at the beginning of the sixth month. a) What is the effect on the company's expected profits for the current yaer? b)Calculate the new break-even point. Assume fixed costs are incurred uniformly throughout the year