Part II Memo

Please help analyze the Memo. Detailed explanation, please. Thank you.

Identify that there are three options: doing nothing, installing the machine, and computing the sales to earn a given target pretax income

1. Compare and analyze the differences you see the three options by way of sales increases (amounts and %), contribution margin (%) and net income or loss (%).
2. What does this tell you about the three options?
3. What is your recommendation?
4. Why?