P20-21 Conspute break-even point and margin of safety ratio, an prepare a CVP income statement before and after changes in business environment. Lorge Corp, has collected the following information after its first year of sales. Sales were $1,500,000 on 100,000 units; selling expenses $250,000 (40% variable and 60% fixed); direct materials S511,000; direct labor S290,000; administrative expenses 5270000 (20% variable and 80% fixed); and manufacturing overhead $350,000 (70% variable and 30% fixed). Top management has asked you to do a CVP analysis so that it can make plans for the coming year. It has projected that unit sales will increase by 10% next year. Instructions @) Compute (1) the contirbution margin for the current year and the projected year, and (2) the fixed costs for the Current year. (Assume that fixed costs will remain the same in the projected year). (b) Compute the break-even point in units and sales dollars for the first year. c) The company has a target net income of $200,000. What is the required sales in dollars for the company to meet its target? (a) If the company meets its target net income number, by what percentage could its sales fall before it is operating at a loss? That is what is its margin of safety ratio? (@) The company is considering a purchase of equipment that would reduce its direct labor costs by $104,000 and would change its manufacturing overhead costs to 30% variable and 70% fixed (assume total manufacturing overhead cost is $335,000, as above). It is also considering switching to a pure commission basis for its sales staff. This would change selling expenses to 90% variable and 10% fixed (assume total selling expense is $250,000, as above). Compute (1) the contribution margin and (2) the contirbution margin ratio, and recompute (3) the break-even point in sales dollars. Comment on the effect each of management's proposed changes has on the break-even point NOTE: Enter a number in cells requesting a value, enter either a number or a formula in cells with a