Casas Modernas of Juarez, Mexico, is contemplating a major change in its cost structure..Rafael would like to know the consequences of the change and increase in Net income for each alternative if sales increased by $142,000.

Manual System1.45,Computerized System4.35

Sale $1,740,000 $1,740,000

Variable costs 1,392,000 696,000

Contribution margin 348,000, 1,044,000

Fixed costs 108,000, 804,000

Net income $240,000, $240,000