Casas Modernas of Juarez, Mexico, is contemplating a major change in its cost structure. Currently, all of its drafting work is performed by skilled draftsmen. Rafael Jiminez, Casas owner, is considering replacing the draftsmen with a computerized drafting system. However, before making the change, Rafael would like to know the consequences of the change, since the volume of business varies significantly from year to year. Shown below are CVP income statements for each alternative.

	Manual System	Computerized System
Sales	$1,580,000	1,580,000
Variable Costs	$1,264,000	623,000
Contribution Margin	316,000	948,000
Fixed Costs	81,926	713,926
Net Income	234,074	234,074

A. Determine the degree of operating leverage for each alternative. (Round answers to 2 decimal places, e.g. 1.25.) -Computerized System -Manual System B. Calculate the increase in Net income for each alternative if sales increased by $110,000. -Computerized System -Manual System C. Calculate the margin of safety ratio. -Computerized System -Manual System D. Using the margin of safety ratio, determine which alternative could sustain the greater decline in sales before operating at a loss. POSSIBLE OPTIONS: -Computerized System -Manual System