Currently, Northwest Chemicals (NWC) only sells its products to other firms in the wholesale market. However, one of NWCs employees recently submitted a proposal that recommends the company expand its operations and sell its chemicals in retail establishments such as Home Depot and Lowes. To determine the feasibility of the idea, you must perform a breakeven analysis. The fixed costs associated with producing and selling the chemicals to retail stores would be $60 million, the selling price per unit is expected to be $10, and the variable cost ratio is expected to be 60 percent of the selling price.

1. What is the operating breakeven point both in dollars and in number of units for the employees proposal?
2. Draw the operating breakeven chart for the proposal. Should the employees proposal be adopted if NWC can produce and sell 20 million units of the chemical? Explain,
3. Suppose NWC expects to produce and sell 20 million units of its product this year.
   1. Compute NWCs operating income at 20 million units of sales.
   2. What is the degree of operating leverage (DOL) at his level of sales? What would be NWCs percent increase in operating profits if sales actually were 10 percent higher than expected?
   3. Currently, NWC pays $16 million in interest. Because the company will not increase its debt if the expansion is implanted, its interest payments will remain the same next year as they were last year. Compute NWCs net income assuming its tax rate is 30 percent.
   4. What would be its degree of financial leverage (DFL) and its degree of total leverage (DTL) if it produces and sells 20 million units? If the actual sales turned out to be 10 percent greater than expected, as a percent, how much greater would the earnings per share be?
4. Explain how breakeven analysis and leverage analysis can be used for planning the implementation of this proposal.

Required: All your computations must be completed using a spreadsheet. You must set up the appropriate equations/relationships in the spreadsheet to complete the computations. You should submit only one filethe spreadsheet that contains your computations. Include the required explanations in the spreadsheet. Label all your work;