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Can anybody help me out with this? During the last two years, a small manufacturing business has suffered erratic sales due to the ongoing COVID
Can anybody help me out with this?
During the last two years, a small manufacturing business has suffered erratic sales due to the ongoing COVID pandemic and supply chain issues. As a result, the business is facing financial difficulties. The contribution format income statement for the month ended November 30, 2021 is: Contribution Margin format Income Statement Sales (19,500 units x $30 per unit) $585,000 Variable Expenses 409,500 Contribution Margin $175,500 Fixed Expenses 180.000 Net Operating Loss $14.500) The Issue The CEO of the business learned automating the manufacturing process could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $72,000 each month. The CEO ask you, as a managerial accountant, if you would recommend that the company automate its operations The Assignment In order to respond to the CEO's question, compute: The current contribution margin ratio and break-even point based on the November 2021 contribution margin format income statement . The new contribution margin ratio and break-even point if the company automates its manufacturing process. Make a recommendation regarding automating the manufacturing process to the CEO. Support your recommendation with at least two data points from your analysis Step by Step Solution
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