Morton/company's contribution format income statement for last month is given below: Sele 4,000 units $26 per unit) Variable expenses Contribution Margin Fixed expenses Net operating income $1,248,00 BE6 374 298152 $80 The industry in which Morton 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 onto the market that would allow Morton Company to automate a portion of its operations. Variable expenses would be reduced by $7.80 per unit. However, fixed expenses would increase to a total of $673.920 each month. Prepare two contribution format income statements, one showing present operations and one showing how operations would appear if the new equipment is purchased 2 Refer to the income statements in (For the present operations and the proposed new operations, compute (aj the degree of operating leverage, by the break-even point in dollar sales, and the margin of safety in dollars and the margin of safety percentage. 3. Refer again to the data in. As a manager what factor would be paramount in your mind in deciding whether to purchase the new equipment? (Assume that enough funds are available to make the purchase. 4. Refer to the origina data. Rather than purchase new equioment, the marketing manager argues that the company's marketing strategy should be changed. Rather than pay sales commissions, which are currently included in variable expenses, the company would pay salespersons fixed salaries and would invest heavily in advertising. The marketing manager claims this new approacin would increase unit sales by 30% without any change in selling price, the company's new monthly fixed expenses would be $477.984. and its net operating income would increase by 20. Compute the company's break-even point in dollar sales under the new marketing strategy Complete this question by entering your answers in the tabs below. Required 1 Required 2 Recuired B Required 4 New equipment has come onto the market that would allow Morton Company to automate a portion of its operations. Variable expenses would $7.50 per unit. However, fixed expenses would increase to a total of 5673,920 each month. Prepare two contribution format income statement present operations and one showing how operations would appear if the new equipment is purchased. (Round "Per Unit to 2 decimal places.) Morton Company Contribution Income Statement Present Amount Per Unit % Amount Proposed Per Unit BE os CIDO $ 0.00 156 S Required 2 > Requined 1 Required 2 Required 3 Required 4 Refer to the income statements in (1). For the present operations and the of operating leverage. (b) the break-even point in dollar sales, and (c) the percentage. (Do not round intermediate calculations. Found your percent be entered as 12.34).) Proposed Degree of operating everage Break-even point in dollar sales Kargin of safety in dollars Margin of safety in percentage