Cost/Volume/Profit Analysis Morton Company's contribution format income statement for last month is given below Sales 42,000 units $29 per unit) Variable expenses Contribution margin Fixed expenses Net operating income $ 1,218,000 852,600 365,400 292,320 73,080 The industry in which Morton Company operates is quite sensitive to cyclical movements in the economy. Thus , profits vary considerably from year to year according to general economic conditionsThe company has a large amount of unused capacity and is studying ways of improving profits.

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Required 1 Required 2 Required 3 Required 4 New equipment has come onto the market that would allow Morton Company to automate a portion of its operations. V expenses would be reduced by $8.70 per unit. However, fixed expenses would increase to a total of $657,720 each mon Prepare two contribution format income statements, one showing present operations and one showing how operations w appear if the new equipment is purchased. (Round "Per Unit" to 2 decimal places.) Show Morton Company Contribution Income Statement Present Proposed Amount Per Unit Sales Variable expenses $ 1,218,000 $ 852,600 365,400 $ Contribution margin Fixed expenses 292,320 Net operating income 73,080 Per Unit 14.4 29.00 11.60 17.40 Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Refer to the income statements in (1). For the present operations and the proposed new operations, compute (a) the degree of operating leverage, (b) the break-even point in dollar sales, and (c) the margin of safety in dollars and the margin of safety percentage. (Do not round intermediate calculations. Round your percentage answers to 2 decimal places (i.e. .1234 should be entered as 12.34).) Show less A Present Proposed 10 a. Degree of operating leverage Break-even point in dollar sales Margin of safety in dollars Margin of safety in percentage b. C. 53 $ 974,400 $ 243,600 20.00 % Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Refer to the original data. Rather than purchase new equipment, the marketing manager argues that the company's marketing strategy should be changed. Rather than pay sales commissions, which are currently included in variable expenses, the company would pay salespersons fixed salaries and would invest heavily in advertising. The marketing manager claims this new approach would increase unit sales by 30% without any change in selling price; the company's new monthly fixed expenses would be $545,664; and its net operating income would increase by 20%. Compute the company's break-even pont in dollar sales under the new marketing strategy. (Hint: figure out the new variable cost per unit by preparing the new contribution format income statement.) (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.) Show less A New break even point in dollar sales