Laila company has provided the following information about the company Sales $225,000 Sales Discount $20,000 Overhead cost (Fixed) $ 35,000 Overhead (Variable) $ 20,000 Sales Return /Allowance $2,500 Selling commission [variable ] $ 39,600 Selling commission [fixed] $ 15,000 Variable admin expenses $ 24500 Fixed admin expenses $ 20,000 Tax 25% Interest expenses $5,420 Capacity of producing 4,000 units Units sold 3,500 Units produced 3,500 Hint : all selling and admin costs are operating expenses

5. Calculate margin of safety in dollars and in percentage . 6. The sales manager believes that a project of the company could increase sales by 25% but variable cost will also decrease by $5,000 and fixed cost will increase by $ 85,000. Should the company accept the project or reject ? 7. Determine the sales revenue necessary to generate before tax profit of $75,000. 8. Determine sales revenue necessary to generate after-tax profit of $75,000 if tax rate is 30% 9. Calculate degree of leverage [DOL] and if sales increases by 25%, what will be the increase or decrease in net income of this company? What will be the total net income if the project is accepted