DES 2 Frieden Company's contribution format income statement for last month is shown below: 10 points Sales (30,000 units) Variable expenses Contribution margin Fixed expenses operating income $1,200,000 900,000 300,000 240,000 60,000 02:46.56 000 Competition is intense, and Frieden Company's profits very considerably from one year to the next Management is exploring opportunities to increase profitability Required: 1. Frieden's management is considering a major upgrade to the manufacturing equipment, which would result in fixed expenses increasing by $300.000 per month. However, variable expenses would decrease by $10 per unit. Selling price would not change Propre two contribution format income statements, one showing current operations and one showing how operations would appear it the upgrade is completed. Show an Amount columna Per Unit column, and a Percentage column on each statement Herce FRIEDEN COMPANY Contribution Marcome statement Present Amount Per Unit AROUN Proposed Per Unit D 0 $ a 0 O ols $ 0 S ol 2 Check my work 2. Refer to the income statements in requirement 1 above. For both current operations and the proposed new operations, compute (a) the degree of operating leverage. (b) the break-even point in dollars, and (c) the margin of safety in both dollar and percentage terms. Present Proposed 10 points a, Degree of operating leverage b. Break-even point in dollars c Margin of safety in dollars Margin of safety in percentage 8 02:20 % Stoped Pret Dances 3-a. Calculate the unit sales per month at which Frieden management will be indifferent between doing the major upgrade to the manufacturing equipment and not doing the upgrade Unit sales per month 3.6. Based on the above analysis, should Frieden proceed with the major upgrade? Yes NO 2 3-c. Why or why not? 10 points In this case the indifference point of sales at which point the upg the operating income, So Freden's the current level have an impact on proceed to upgrade 2 02:46:00 sipped Boom Pet References 4-a. Refer to the original data, instead of doing the major upgrade to equ nent management is considering introducing a new advertising campaign that will increase fed expenses by $25,000 per month, Management believes the new advertisements will increase monthly unit sales by 10%. In this case what would be impact on operating income opowing income