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Chez Giva is considering investing in a soda machine operation involving 20 soda machines located in various locations around the city. The machine manufacturer reports

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Chez Giva is considering investing in a soda machine operation involving 20 soda machines located in various locations around the city. The machine manufacturer reports that similar soda machine routes have produced a sales volume ranging from 1,000 to 1, 200 units per machine per month. The following information is made available to Giva in evaluating the possible profitability of the operation. 1. An investment of exist50,000 will be required, exist10,000 for merchandise and exist40,000 for the 25 machines. 2. The machines have a service life of five years and no salvage value at the end of that period. Depreciation will be computed on the straight-line basis. 3. The merchandise (soft drinks) retails for an average of exist1 per unit and will cost Giva an average of 40 cents per unit. 4. Owners of the buildings in which the machines are located are paid a commission of 5 cents per soft drinks sold. 5. One person will be hired to service the machines. The salary will be exist1, 200 per month. 6. Other expenses are estimated at exist500 per month. These expenses do not vary with the number of units sold. a. Determine the unit contribution margin and the break-even volume in units and in dollars per month. b. Draw a monthly cost-volume-profit graph for sales volume up to 1,000 units per machine per month. c. What sales volume in units and in dollars per month will be necessary to produce an operating income equal to a 25% annual return on Givas exist50,000 investment? (Round to the nearest unit.) d. Giva is considering offering the building owners a flat rental of exist40 per machine per month in lieu of the commission of 5 cents per unit sold. What effect would this change in commission arrangement have on his monthly break-even volume in terms of units

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