Frieden Company's contribution format income statement for the most recent month is given below: Sales (45,000 units) Variable expenses Contribution margin Fixed expenses $ 900,000 630,000 270,000 216,000 $ 54,000 Net operating income The industry in which Frieden Company operates is quite sensitive to cyclical movements in the economy. Thus, profits vary considerably from year to year according to general economic conditions. The company has a large amount of unused capacity and is studying ways of improving profits. Required: 1. New equipment has come on the market that would allow Frieden Company to automate a portion of its operations. Variable expenses would be reduced by $6.00 per unit. However, fixed expenses would increase to a total of $486,000 each month. Prepare two contribution format income statements: one showing present operations, and one showing how operations would appear if the new equipment were purchased. (Input all amounts as positive values except losses which should be indicated by minus sign. Round your "Per unit" answers to 2 decimal places.) Amount Present Per Unit Proposed Percentage Amount Per Unit Percentage % % % % 0 $ 0.00 0% 0 $ 0.00 0% S 0 $ 0 b-1. Assume that the new plant is constructed and that next year the company manufactures and sells the same number of skateboards as sold in the most recent year. Prepare a contribution format income statement. (Do not round intermediate calculations.) Contribution Income Statement 0 0 b-2. Compute the degree of operating leverage. (Do not round intermediate calculations.) Degree of operating leverage Hell 6. Refer to the data in Requirement (5) above. a. If the new plant is built, how many skateboards will have to be sold next year to earn the same net operating income, $240,000, as last year? (Do not round intermediate calculations.) Number of skateboards b-1. Assume that the new plant is constructed and that next year the company manufactures and sells the same number of skateboards as sold in the most recent year. Prepare a contribution format income statement. (Do not round intermediate calculations.) Contribution Income Statement 0 0 4. Refer again to the data in Requirement (2) above. The president has decided that the company may have to raise the selling price of its skateboards. If Tyrene Products wants to maintain the same CM ratio as last year, what selling price per skateboard must it charge next year to cover the increased labour costs? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Selling price S 42.50 Help 5. Refer to the original data. The company is considering the construction of a new, automated plant. The new plant would result in the contribution margin per unit increasing by 60%, but it would cause fixed costs to increase by 90%. If the new plant is built, what would be the company's new CM ratio and new break-even point in skateboards? (Do not round intermediate calculations.) Contribution margin Unit sales to break-even point skateboards 6. Refer to the data in Requirement (5) above e. If the new plant is built, how many skateboards will have to be sold next year to earn the same net operating income, $240,000, as last year? (Do not round intermediate calculations.) Number of skateboards