Question 2 of 8) value 3.16 points Morton Company's contribution format income statement for last month is given below. Sales (42.000 units * $30 per unit) Variable expenses Contribution margin Fixed expenses Net operating income $1,260,000 882,000 378,000 302.400 $ 75,600 The Industry in which Morton Company operates is quite sensitive to cyclical movements in the economy. Thus, profits vary considerably from year to The company has a large amount of unused capacity and is studying ways of improving profits. Required: 1 New equipment has come onto the market that would allow Morton Company to automate a portion of its operations. Variable expenses would be re would increase to a total of 5680 400 each month. Prepare two contribution format income statements, one showing present operations and one show! equipment is purchased. (Round your "Per unit" answers to 2 decimal places.) Morton Company Contribution Income Statement Present Amount Per Unit $ 1.260.000 $ 30.00 100% 882.000 21.00 701 % 378,000 $ 900 30 % Sales Variable expenses Contribution margin Proposed Amount Per Unit s 1,260,000 $ 30.00 12.00 1.260,000 $ 18.00 96 1001% 4096 60% F in 4. w to conto tomate a prop two con tomatoes madre S2000 wat we Comar 1 casos 100 23 Do 2100 900 100 1200 DC 370 302.000 7500 1.200.000 GO 5 1 US . 2 Peter to me recome statements about to both present persons and the propone new version, compute The of operating every Bapatla paat | The event 2 3 4 5 7 B 9 6 W E 's R. E T U o 0 A S D G H J X . Z C C B N N M Present Proposed reak-even point in dollar sales The margin of safety in both dollar and percentage terms. Present Proposed Margin of safety in dollar sales Margin of safety in percentage % % 3. Refer again to the data in (1) above. As a manager, what factor would be paramount in your make the purchase.) Performance of peers in the indstry Reserves and surplus of the company Stock level maintained Cyclical movements in the economy TE 2 Refer to the income statements in (1) above. For both present operations and the proposed new operations, comput a The degree of operating leverage. Present Proposed Degree of operating leverage D. The break-even point in dollar sales Present Break-even point in dollar sales Proposed c. The margin of safety in both dollar and percentage terms. Present Proposed Margin of safety in dollar sales Margin of safety in percentage X Mode OperX C Motor Company Contact ertoeducation.com/mx05361701710550148, 1647999766342 Morton Company C Morten 3 Refer again to the data in (1) above As a manager, what factor would be paramount in your mind in deciding whether to purchase the new equipment? (Assume that en make the purchase O Performance of peers in the indstry Rerves and surplus of the company Stod level maintained Cydical movements in the economy 4 Refer to the orginal data Rather than purchase new equipment, the marketing manager argues that the company's marketing strategy should be changed. Rather than pay which are currently included in variable expenses, the company would pay salespersons fixed salaries and would invest heavily in advertising the marketing manager cam increase unit ses by 50% without any change in selling price, the company's new monthly Towed expenses would be $378,000, and is net operating income would increase by break even point in corsales for the company under the new marketing strategy News even point in dolara References eBook & Resources Financial Statements home ces changed hp Model 2 X Cute Crys Mom * C More to meducation.com/.-05361701710550043, 1647999766342 Motos Retegan to the catan (1) above As a manager, what factor would be paramount in your mind in deciding whether to purchase the new equipment Assume that enough tons make the purchase) O Performance of peers in the indstry Reserve and works of the company Sweated Cydia movements in the com 4 Refer to the ongina data Rather than purchase new equipment, the marketing manager argues that the company's innteting strategy should be changed therapy.com which we currently included in variable expenses the company would pay salespersons fixed salaries and would invested in advertising The meting manager cathew en sales by 50% thout any change in selling price the company's new monthly foed expenses would be $375,000, and its net operating income wat 25 Compte break even portales for the company under the new marketing strategy Raterences Book & Resources Financial statements SUM op