Number of Units Sold 18,000 Total Variable Cost Variable Cost Percentage 65.0% Total Contribution Margin $390,600 Total Fixed Costs Net Income/(Loss) (524,400) 2. Selling Price per Unit S188.00 Variable Cost Percentage Number of Units Sold 2,500 Total Contribution Margin Total Fixed Costs $300,000 Net Income (Loss) S29,000 3. Total Variable Cost S429,000 Selling Price per Number of Units Unit Sold 65,000 Contribution Margin Percentage Total Fixed Costs $35,000 Net Income (Loss) $23,500 Total Sales 4. Selling Price per Unit S185.00 Number of Units Sold Variable Cost per Unit Total Fixed Costs Contribution Margin Percentage 60% Net Income (Loss) SI57 250 Retum on Sales NI/Sales 17% Problem #2: Letterman Office Service & Supply (LOSS) sells a variety of office equipment including the Executive office chair. The Executive sells for $150. Expected sales for next year are 6,000 units (sales estimates made by management are usually within 10%). LOSS is considering a change in its manufacturing process. The accountants and engineers have developed the following two cost structures: Current Manufacturing System: $125 variable cost per unit and $120,000 in fixed costs. Alternate Manufacturing System: $50 variable cost per unit and $540,000 in fixed costs. At what level of sales will LOSS be indifferent between the two manufacturing plans? Indifference Point in units: What are the break-even points in units for the two manufacturing plans? Current System break-even: Alternate System break-even: What are the margins of safety of the two plans in units and percentage? Current System MOS in units: Alternate System MOS in units: Current System MOS % Alternate System MOS%: Which plan would you choose for LOSS? Why? What if sales are expected to increase? What if sales are expected to decrease