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 Jimmnez, Casas owner, is considering replacing the draftsmen with a computerized draftsmen system. However, before making the change, Rafsel

would like to know the consequences of the change,

Manuel system Computerized system

Sales 1,800,000 1,800,000

Variable Costs 1,440,000 720,000

Contribution Margin 360,000 1,080, 000

'Fixed Costs 120,000 840,000

Net Income $ 24,000 $ 24,000

Calculate the Margin of safety ratio:

Manual System ____________________

Computerized System ________________________