Part 1: The CEO of Lauren Manufacturing is interested in setting up an equation to predict fixed and variable costs. You are contracted as a consultant to develop a cost function using the high-low method. Furthermore, you are required to do in-depth analysis from your results. From this analysis, you need to calculate the variable cost ratio, contribution margin ratio, total fixed costs, operating leverage and the break-even point in sales dollars. The following data for 2013 and 2014 is provided:

2014 2013 Revenues 400,578 370,182 Operating Expenses 340, 720 320,678 Operating Income 59,858 49,504

Part II After you finished that consulting project, another company hires you to evaluate their current sales mix. The company sells two kinds of tables, pine and redwood. At a 2:1 unit sales mix in which the company sells two pine tables for every redwood table, the following revenue and cost information is available. Pine Table Redwood Table Unit Selling Price 400 1,200 Unit Variable costs 250 550 Unit Contribution Margin 150 650 Fixed costs per month: 18,000 You assume a 2:1 sales mix in your calculation. Provide your current monthly weighted average unit contribution margin, break-even sales volume, and number of units of Pine and Redwook tables at break-even point. What are your managerial suggestions regarding your results?