GIVEN:

Crane Corporation has collected the following information after its first year of sales. Sales were $1,890,000 on 126,000 units; selling expenses $315,000 (40% variable and 60% fixed); direct materials $643,860; direct labor $365,400; administrative expenses $340,200 (20% variable and 80% fixed); and manufacturing overhead $441,000 (70% variable and 30% fixed). Top management has asked you to do a CVP analysis so that it can make plans for the coming year. It has projected that unit sales will increase by 10% next year. Contribution margin for current year is $378,000 for projected year $415800 and the fixed costs for the current year is $593460 break even point in units is 197820 units, break even in dollars is 2967300. The company has a target net income of 252000. the sales dollars required for target net income is 4227300. the margin of safety ratio= 29.8%

ANSWER THIS QUESTION DOWN BELOW:

The company is considering a purchase of equipment that would reduce its direct labor costs by 131040 and would change its manufacturing overhead costs to 30% variable and 70% fixed (assume total manufacturing overhead costs is 441000 as above) it is also considering switching to a pure commission basis for its sales staff. this would change selling expenses to 90% variable and 10% fixed ( assume total selling expenses is 315000% as above) compute the contribution margin and contribution margin ratio, and recompute the break even in sales dollars.