Need my work checked a little unsure of my answers and my recommendation for step 4

% Change from 2019 Actual Scenario #1 Scenario #2 Sales in units Sales price per unit Direct labor cost per unit Direct materials cost per unit Variable overhead cost per unit Variable selling & admin per unit Fixed manufacturing costs Fixed selling & admin costs 5% -3% -10% 6% 0% 1% 9% 2% -13% 12% 2% 18% 1% -2% 0% 1% Step #1 Inputs: 2019 Actual Scenario #1 Scenario #2 Sales in units Sales price per unit Direct labor cost per unit Direct materials cost per unit Variable overhead cost per unit Variable selling & admin per unit Fixed manufacturing costs Fixed selling & admin costs 85,000.00 95.00 18.00 15.00 6.00 4.00 1,050,000.00 1,250,000.00 89,250.00 92.15 16.20 15.90 6.00 4.04 1,144,500.00 1,275,000.00 73,950.00 106.40 18.36 17.70 6.06 3.92 1,050,000.00 1,262,500.00 28 Step #2 Income Projections: 29 2020 Projections 2020 Projections 2019 Actual Scenario 1 Scenario 2 $ 8,075,000 $ 8,224,388 $ 7,868,280 30 31 32 33 34 35 Sales revenue Less variable expenses: Direct labor Direct materials Variable overhead Variable selling & admin Total variable expenses Contribution margin Less fixed mfg overhead Less fixed selling & admin Operating income 36 1,530,000 1,275,000 510,000 340,000 3,655,000 4,420,000 1,050,000 1,250,000 2,120,000 $ 1,445,850 1,419,075 535,500 360,570 3,760,995 4,463,393 1,144,500 1,275,000 2,043,893 $ 1,357,722 1,308,915 448,137 289,884 3,404,658 4,463,622 1,050,000 1,262,500 2,151,122 37 38 39 40 $ 41 42 43 Step #3 CVP Analysis: Contribution margin per unit Contribution margin ratio $ 52.00 $ 0.55% 50.01 $ 0.54% 60.36 0.57% 44 45 46 Break-even sales in units Break-even sales in $$ 44,231 4,181,818 $ 48,380 4,480,556 $ 38,312 4,057,018 47 $ 48 49 50 51 52 53 Step #4: Recommendation: My recommendation would be to use scenario 2 personally. While you might have a little less revenue when calculating your yearly projections in the end, operating income in my opinion is more important. I would always take the option that would give me more money to invest back into my operation because that's what will keep my business up and running. Instead of being greedy and taking an extra million in sales I would like an extra hundred thousand to invest back into my business. Not only that but you also would have to sell less units to break even and need less revenue to break even in sales. If you can't make profit it's important to at least break even and the less you would need to break even in my opinion the better. . 54 55 56 57 58 59 60 61 62 63 64 Step #5: Extra Credit (6 points) 65 66 Margin of safety in units Margin of safety in sales $$ 40,769 3,873,077 $ 40,870 3,766,141 S 35,638 3.791.905 67 $ 68 69 #Units to achieve target profit of $2,500,00 N/A $ 98,370 $ 79,730 70