On the sheet tab labeled SOLUTION 3, use the DATA FOR SOLUTION 3 on the sheet tab labeled DATA to: H Compute the new contribution margin ration Compute the new break even in number of 2.6 gallon fish tanks Compute the number of 2.6 gallon fish tanks that will have to be sold next year to maintain the current operating income On the sheet tab labeled SOLUTION 4, use the DATA FOR SOLUTION 3 and DATA FOR SOLUTION 4 on the sheet tab labeled DATA to: K Assume the company sells the same number (10,000) of 2.6 gallon fish tanks as last year and prepare a contribution format income statement 1 Compute the degree of operating leverage M Explain whether or not you would be in favor of building the new plant ORIGINAL Smith Company manufactures fish tanks. One of the fish tanks that the company produces is a 2.6 gallon fish tank that the company GIVEN DATA sells for $37.50. The fish tanks are manufactured in an outdated fish tank manufacturing facility that is labor intense, relying heavily FOR on direct labor workers. Variable costs are high, totaling $22.50 per 2.6 gallon fish tank of which 60% is direct labor cost. Last year the SOLUTION1 company sold 40,000 2.6 gallon fish tanks and had $480,000 in fixed expense associated with the 2.6 gallon fish tank. ADDITIONAL DATA FOR SOLUTION 2 Next year variable costs are estimated to increase by $3 per 2.6 gallon fish tank due to an increase in labor rates. Selling price will not change. DATA FOR Refer to ORIGINAL GIVEN DATA FOR SOLUTION 1 and build a new plant that next year will slash the original variable cost by 40% and SOLUTION 3 increase fixed expense by 90%. DATA FOR SOLUTION 4 Refer to DATA FOR SOLUTION 3