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

1. Calculate margin of safety in dollars and in percentage.

2. 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 ?

3. Determine the sales revenue necessary to generate before tax profit of $75,000.

4. Determine sales revenue necessary to generate after-tax profit of $75,000 if tax rate is 30%

5. 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