Sammi's Custom Cabinets (SCC's) specializes in making hand-crafted high-end cabinets. Sammi is considering buying some state-of-the-art planing and cornicing machines. She believes this will reduce the amount of time she and her staff spend on making cabinets and also will significantly reduce the amount wasted materials. Under her current cost structure (i.e., without the new machines), Sammi estimates that her fixed costs average $36,000 per month and that her contribution margin ratio is 40%. If Sammi acquires the machines, her fixed cost would increase to $60,000 per month; however, her contribution margin ratio would also increase to 60%. Regardless of which option she chooses, she expects to earn revenue of $150,000.

For the questions below, Option A represents Sammi's current cost structure and Option B represents her cost structure if she acquired the new machines.

a. What is Sammi's breakeven revenue under Option A?

b. What would her monthly breakeven revenue under Option B?

c. What is Sammi's margin of safety percentage (MOS%) under Option A?

What would Sammi's Margin of Safety percentage (MOS%) be under Option B?

(Input both answers to part c. as a decimals rounded to two decimals, i.e., "0.35".)

d. Which option has higher operating leverage? Input either "A" or "B".

e. Which option has greater downside risk in its cost structure? Input either "A" or "B".

f. Which option has greater upside potential in their cost structure? Input either "A" or "B".