CASE STORY BLM Ltd is a company that manufactures and sells phones in El Dorado. Management of the impro accounting department to ask a few questions. Below is a table that provides some information on the sales and costs incurred in the recent year company is interested in using the cost-volume analysis to ve the company's profit performance. So he approached the management Sales Variable costs S72000 $18000 Fixed cost Tax rate Units produced 25% 6500 1. Assume that management is planning to automate the system. Sales in units will increase by 22% and variable cost will increase by 10% and fixed cost by $ 5200. Should management proceed with the project? Use Contribution Margin approach. 2. Refer to the original data. Assume management wants the company to earn a minimum profit of 25 % more than it earns presently, how many units have to be sold to meet this goal. Use the contribution margin method Calculate revenue if company wants to make a profit before tax of $25000 Manager asked the consultant to calculate margin of safety from the original data. 3. 4. 5. The next sets of information he wanted were the break-even point in both units and dollars. He wants the consultant to use both the CMR method and CM per unit to calculate them What information does margin of safety give to the management? No 6. calculation required here. a) Compute the company's degree of leverage at the present level of sales. 7. b) Assume that through a more intense effort by sales staff the company's sales increase by 10% next year. By what percentage would management expect net income to increase? Use the operating leverage concept to obtai the answer. [35]