Schuch Company sells a single kind of product. In the current month the company sold a total of 18,900 units and earned $378,000 as sales. The variable cost per unit is $6.25. The company incurs a fixed cost of $170,500 per month.

1. The manager of Schuch Company predicts that by renting a bigger show room to display its products, more customers will be attracted to the company products, thus unit sales will increase by 3,000 units per month. Renting a new show room will increase rent expenses by another $15,000. To compensate for the increase in expenses, the managers wants to increase the selling price per unit to $22. Compare the current and proposed scenario based on Margin of safety (in dollars) values and state whether the company should go with the managers decision or stick to the current plan. Explain your answer. (6 marks)