Evaluate the effect of the move to the company's Plant margin, change in dollar, and change in PM%. Assume a 5% increase and decrease in volume would not affect fixed cost. Use Exhibit 8 and compute for Andover's Plant Margin by using Exhibit 9 and 10 information then make a comparison. Based on the sensitivity to changes in sales volume, which location is more desirable?

Exhibit 8 Income Statements for Danvers Assembly Business Unit' Revenue $ 37,540,000 100% Less Variable Costs: Direct Materials $ 27,302,000 73% Variable Manufacturing OH 357,000 1% Variable Support & Logistics OH 4,925 0% Contribution Margin $ 9,876,075 26% Less Fixed Costs: Assembly Labor 1,872,000 Support & Logistics Labor 1,144,000 Plant Administration and Management 480,000 Occupancy 928,000 Depreciation - Assembly Equipment 456,000 Depreciation - Furnishing and Fixtures 259,800 Depreciation - Administration Assets 4,800 $ 5,144,600 14% Plant Margin $ 4,731,475 13% Capital Charge (cost of capital = 10%) $ 1,805,600 Plant Economic Income $ 2,925,875 8% 7 The quantitative data in Exhibits 8 through 10, while representative of actual observations at Drager, have been disguised for competitive and confidentiality purposes. Exhibit 9 Estimates of Headcount Changes from PRIME Reconfiguration Current/Danvers Projected/Andover Assembly Labor 30 24 Support & Logistics Labor 22 12 Plant Administration and Management 4 56 40 IMA EDUCATIONAL CASE JOURNAL 9 VOL. 4, NO. 1, ART. 1, MARCH 2011