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need (a) (b) and (c) (b) is looking for increase in net income for manual and computerized system. (Calculate the increase in Net income for

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need (a) (b) and (c)

(b) is looking for increase in net income for manual and computerized system. (Calculate the increase in Net income for each alternative if sales increased by $137,000.) and which would produce the higher net income.

(c) is looking for manual and computerized system for margin of safety ratio (Calculate the margin of safety ratio. (Round ratios to 2 decimal places, e.g. 0.25.)

Casas Modernas of Juarez, Mexico, is contemplating a major change in its cost structure. Currently, all of its drafting work is performed by skilled draftsmen. Rafael Jiminez, Casas' owner, is considering replacing the draftsmen with a computerized drafting system. However, before making the change, Rafael would like to know the consequences of the change, since the volume of business varies significantly from year to year. Shown below are CVP income statements for each alternative. Sales Variable costs Contribution margin Fixed costs Net income Manual System $1,620,000 1.296,000 324,000 84,000 $240,000 Computerized System $1,620,000 648,000 972,000 732,000 $240,000 Determine the degree of operating leverage for each alternative. (Round answers to 2 decimal places, e.g. 1.25.) Degree of Operating Leverage Manual System Computerized System

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