Natural Stone Corporation located in Orlando, Florida manufactures thin travertine sheets used for the facade of buildings. The companys income statement for 2020 follows. Natural Stone sold 1,800 tons in 2020 and the maximum capacity of the firms manufacturing facilities is 3,000 tons per year. Disregard income taxes.

Required:

Students are required to create an Excel spreadsheet to answer all of the following questions.

1.(1 point) Determine the Natural Stones break-even volume in tons for 2020.

2.(1 point) In 2021, management expects sales quantity to be 2,100 tons. Estimate the net income for 2021 (all other data stay the same).

3.(1 point) Natural Stone has been attempting to expand to the Asian market. A potential Japanese customer has offered to purchase 1,500 tons at $450 per ton. Determine the net income that the firm would make if this order is taken. Note that the company would need to reject some regular business in order not to exceed manufacturing capacity. Assume all other data as in the original problem.

4.(1 point) In an attempt to expand to the Asian market, Natural Stone is planning to market its product in Asia. In this effort, the company will need to incur the following additional costs in Asia:

Annual fixed advertising expense: $61,500 Sales commission: $25 per ton

Determine the quantity of travertine sheets that would have to be sold in Asia to maintain the firms current net income of $157,500. Assume all other data as in the original problem (sales and costs will stay at the same amounts as in 2020 in the firms current markets).

5.(1 point) Natural Stone is investigating an option of replacing its labor-intensive process with an automated manufacturing system. This option would increase the annual fixed manufacturing costs by $58,500 and reduce the variable costs by $25 per ton. Determine a break-even volume in tons and in sales dollars.

Natural Stone Corporation Income Statement For the Year Ended December 31, 2020 Sales $900,000 Variable costs: Manufacturing $ 315,000 Selling costs 180,000 Total variable costs $ 495,000 Contribution margin $ 405,000 Fixed costs: Manufacturing $ 100,000 Selling 107,500 Administrative 40,000 Total fixed costs $ 247,500 Net income $ 157,500