Question (3): [30 Marks - 50 Mins] (A) (15 Marks) Cutlass Company manufactures a single product. In preparing for next year's operations, management has developed the following estimates: Rcyume. 1. Compute the break-even point in units. (43 Marks) 2. How many units must be sold to earn a profit of $30,000 ? (3 Marks) 3. Compute the contribution margin ratio. Using that ratio, compute the additional profit that Cutlass would earn if sales were $25,000 more than expected. (3 Marks) 4. Suppose Cutlass would like to earn operating income equal to 20 pereent of sales revenue. How many units must be sold for this goal to be realized? Prepare an income statement to prove your answer. (3 Marks) 5 . For the projected level of sales, compute the margin of safety (3 Marks). Total: 15 marks (B) (15 Marks) Camey Company manufactures cappuccino makers. For the first cight months of 2013 , the company reported the following operating results while operating at 86% of plant capacity: An analysis of costs and expenses reveals that variable cost of goods sold is $95per unit and variable operating expenses are $35 per unit. In September, Camey Company receives a special order for 40,000 machines at $135 each from a major coffee shop franchise. Acceptance of the order would result in $10,000 of shipping costs but no increase in fixed expenses. Required (a) Prepare an incremental analysis for the special order. (7 Marks) (b) Should Camey Company accept the special order? Justify your answer. ( 8 Marks)