Required:

a. Calculate the break-even point and safety margin.

b. Management is contemplating the use of plastic gearing rather than metal

gearing in Product A. This change would reduce variable expenses by $18 per unit.

The company's sales manager predicts that this would reduce the overall quality

of the product and thus would result in a decline in sales to a level of 250 units per

month. Should this change be made?

The following monthly data in contribution format are available for the Bowshar Company and its only product, Product A: Total Per Unit Sales 80 700 269 Variable expenses 31800 106 Contribution margin 48 900 163 Fixed expenses 40 000 The company produced and sold 300 units during the month and had no beginning or ending inventories. Required: a. Calculate the break-even point and safety margin. b. Management is contemplating the use of plastic gearing rather than metal gearing in Product A. This change would reduce variable expenses by $18 per unit. The company's sales manager predicts that this would reduce the overall quality of the product and thus would result in a decline in sales to a level of 250 units per month. Should this change be made