E-Z Seats manufactures swivel seats for customized vans. It currently manufactures 8,500 seats per year, which it sells for $400 per seat. It incurs variable costs of $144 per seat and fixed costs of $1,305,600. It is considering automating the upholstery process, which is now largely manual. It estimates that if it does so, its fixed costs will be $2,091,000, and its variable costs will decline to $72 per seat. Answer the following questions.

Prepare a CVP income statement based on current activity.

E-Z Seats CVP Income Statement
Fixed CostsNet Income/(Loss)SalesGross ProfitVariable CostsContribution Margin		$
Net Income/(Loss)SalesGross ProfitContribution MarginVariable CostsFixed Costs
Gross ProfitVariable CostsContribution MarginSalesFixed CostsNet Income/(Loss)
Fixed CostsSalesGross ProfitNet Income/(Loss)Variable CostsContribution Margin
Gross ProfitVariable CostsNet Income/(Loss)Contribution MarginFixed CostsSales		$

Compute contribution margin ratio, break-even point in dollars, margin of safety ratio, and degree of operating leverage based on current activity. (Round margin of safety ratio and degree of operating leverage to 1 decimal place, e.g. 2.5% or 2.5 and break-even point in dollars to 0 decimal places, e.g. 2,520.)

Contribution margin ratio			%
Break-even point in dollars		$
Margin of safety ratio			%
Degree of operating leverage

Prepare a CVP income statement assuming that the company invests in the automated upholstery system.

E-Z Seats CVP Income Statement
Net Income/(Loss)Contribution MarginSalesVariable CostsGross ProfitFixed Costs		$
Variable CostsGross ProfitSalesNet Income/(Loss)Contribution MarginFixed Costs
Fixed CostsVariable CostsNet Income/(Loss)SalesGross ProfitContribution Margin
Fixed CostsVariable CostsNet Income/(Loss)Contribution MarginGross ProfitSales
Fixed CostsGross ProfitContribution MarginVariable CostsNet Income/(Loss)Sales		$

Compute contribution margin ratio, break-even point in dollars, margin of safety ratio, and degree of operating leverage assuming the new upholstery system is implemented. (Round degree of operating leverage to 1 decimal place, e.g. 2.5.)

Contribution margin ratio			%
Break-even point in dollars		$
Margin of safety ratio			%
Degree of operating leverage