PNE Company is planning to introduce a new production system which will not affect the quality of the existing products. The estimated manufacturing costs for the existing and new systems are: Existing System New System Direct labour $16.80 $15.00 Direct materials 21.60 18.00 Variable overhead 14.40 9.00 Fixed overhead $3,960,000 $7,320,000 The existing selling price is $90. The company expects to sell 300,000 units during the period. Required: a. Calculate the breakeven point in unit for the existing and new systems. b. Calculate the margins of safety for the existing and new systems based on (a) above. c. Use graphs to determine the sales level that both the existing and new system will produce the same net income. Identify the sales levels under which the firm should employ the existing or the new system. d. Calculate the degrees of operating leverage for the new system at the expected sales level of 300,000 units. e. With the help of graphs, briefly illustrate and explain the operating leverages and risk levels of the existing and the new systems