3. Electra Corporation manufactures computers. Over the past year the company sold 400 computers, with the following operating results: (30 pts.)

Total Per Unit

Sales (400 computers) $200,000 $500

Less variable expenses 120,000 300

Contribution margin 80,000 $200

Less fixed expenses 50,000

Net income $30,000

1. Compute: (a) the CM ratio; (b) the break-even point in number of computers; and (c) the break-even point in $ sales.
2. Compute the margin of safety.
3. Due to an increase in labor rates, the company estimates that variable costs will increase by $30 per computer next year. If this change takes place and Unitech increases the selling price per computer to $520, what will be: (a) the new CM ratio; (b) the new break-even point in number of computers; and (c) the new net income, if 400 computers are sold.
4. Refer to the original data. The company is considering the construction of a new, automated plant to manufacture the computers. The new plant would cut variable expenses per unit by 30%, but it would cause fixed costs to increase by 60%. If the new plant is built, what would be the companys: (a) new CM ratio; (b) new break-even point in number of computers; and (c) new net income, if 400 computers are sold.