EZ Print LTD$.$ produces and sells printing products across Canada. Last year, sales volume totaled $$850,000.$ Volume for the first five months of the current year totaled $$600,000,$ and sales were expected to be $$1\mathrm{.}6$ million for the entire year. Unfortunately, the printing business in the region where EZ Print is located is extremely competitive. More than $100$ printing shops are all competing for the same business.

The company currently manufactures one type of high$-$quality printer with the average unit selling prices, unit variable costs, and direct fixed costs are as follows:

Budgeted costs: $

Unit sale price: $5000$

Direct labour$/$unit $1386$

Direct materials$/$unit $1433$

Variable Mfg$.$ OH $/$ unit $1195$

Depreciation $150000$

Insurance expense $50000$

Salaries expense $10000$

Rent expense $15000$

Required:

$1)$ EZ Print can buy machines that will make the majority of the printer parts. If the company chooses to purchase the machines, the variable costs will decrease by $8\%$ but the fixed costs will increase by $$52,000.$ The plan would be to purchase the machine at the beginning of July. Fixed costs for the company are incurred equally throughout the year. Calculate the following:

a$.$ impact on operating income

b$.$ new number of printers to break even.

c$.$ sales dollars to break even.

$2)$ EZ Print is considering the option of opening a new retail outlet, which will increase salaries by $$40,000,$ insurance by $$10,000,$ and rent expenses by $$30,000$ per year. This is expected to increase sales by $25$ percent, and the plan would be to open this up at the beginning of July $($halfway through the upcoming year$).$ Calculate the following:

a$.$ Impact on EZ Print$$s expected profits for the year

b$.$ new break$-$even point in quantity of printers

c$.$ new break$-$even point in sales dollars

$3)$ Write a memo to the CFO of EZ Print discussing your recommendations from both questions $1$ & $2$ above. Discuss both quantitative and qualitative factors in your recommendation.