Dog 0 andy distributes a dog colfar made of woosen teads that vells for $40 per unit varuble expenses are $20 per unit, and fised experiues tot al $120,000 per vea, its operating iesuls for laut verar were an foloes: Required: Anwwer each of the followine indeptrisent ceestions based on the orginal doxa. 1. What is the products cM rato? much wil operatine income decrevie? operating income if his ideas are implemented? Do vou recommed implementing the wles munuer sugestioni wh? Lawson Manufacturine Company's (UMC) contribution format income statement for the most recent month a given below: UMC's operating income is highly sensivive to changes in the operating envifonenent, and manapement is considerire wars to stabilise eartings and improve peofit abifity Required: 1. Now equipment has come on the market that would allow IMC to automate a portion of is operations. Variable conts would be reduced by $9 per unic. Howrver, fived costs would incremie to a toeal of 5225,000 each month. Prepare two contribution format income statements, one showing ourrent operations and one showing how operations would appear if the hew equipment is purchared. Show an Amount column, a Per Unit column and a Fercentage column on each Maternent. Do not show percentaes for the find costs. 2. Refer to the incone statements in (1) above, For toth cirrent operations and the proposed new operations. compute (a) the degree of operating leverage, (b) the break-even point in dolars, and (c) the margin of suterin both dollar and percentage term. 3. Refer again to the data in (a) above. As a manager, what factor wonld be paramount in vour mind in decidine whether to purchase the new equipment? frou may ascume that ample funds are avalable to make the purchase) 4. Refer to the orighal data. Rather than purchase new equipment, the marketing manager arsues that the company's marketing strateby should be changed. Iestead of paring sules commissions, which are included in variable expenses, the marketing manager supgests that sulespeople be paid facd salaries and that the compary invest heavily in advertising. The marketing manager claims that this new approach would increase unit sales by 30% without arry change in selling price, the compan/s new monthy faed expenses would be 5180,000 , and its operating income would increase by 20%. Compute the break even point in dollar sales for the company under the new marketing strategy. Do you agree wish the marketing manager's proposal? 5. What level of sales under the new marketing stratery would pererate the same operating income as the most recent month