Snowridge Manufacturing has a factory that produces custom bathroom cabinets. Should the company consider the changes from Schedule-6? Why or why not? A comprehensive discussion is needed to fully answer this question. Please consider and discuss the following areas: fixed costs change, economies of scale, CM per unit change and sales fluctuation. I would recommend creating a new spreadsheet (with the changes) with the same volumes as schedule-5 and additional volumes to understand how to answer this question. In addition, give some real examples of additional cost increases for fixed costs and decreases for direct materials that could be implemented for this specific business. (at least 3 examples in total).

SCHEDULE 5 SNOWRIDGE MANUFACTURING CVP INCOME STATEMENT Volumes By Unit 400 1,000 1,200 per unit Sales Revenue $ 1,582,000 $ 3,955,000 $ 4,746,000 $ 3,955 Less: Variable Costs Direct Materials 640,000 1,600,000 1,920,000 1,600 Direct Labor 120,000 300,000 360,000 300 Sales Commision 18,000 45,000 54,000 45 Office Utilities & Misc. Office Expenses 4,000 10,000 12,000 10 Sales Travel 9,600 24,000 28,800 24 Total Variable Costs 791,600 1,979,000 2,374,800 1,979 Total Contribution Margin 790,400 1,976,000 2,371,200 1,976 Less: Fixed Costs Total Fixed Cost 1,007,000 1,007,000 1,007,000 1,007 Operating Income $ (216,600) $ 969,000 $ 1,364,200 $ 969 SCHEDULE 5A BREAK-EVEN UNITS & SALES Break-even Units 510 units Break-even Sales ($) $ 2,017,050SCHEDULE 6 SNOWRIDGE MANUFACTURING REVISED CVP INCOME STATEMENT Volumes By Unit per unit 400 800 1000 1200 Sales (increase 2%) S 4,034 $ 1,613,640 $ 3,227,280 $ 4,034,100 $ 4,840,920 Less: Variable Cost Direct Material (decrease 10%) 1440.00 576,000 1,152,000 1,440,000 1,728,000 Direct Labor 300.00 120,000 240,000 300,000 360,000 Sales Commission 45.00 18,000 36,000 45,000 54,000 Office Utilities & Misc. Office expenses 10.00 4,000 8,000 10,000 12,000 Sales Travel 24.00 9,600 19,200 24,000 28,800 Total Variable Costs 1819.00 727,600 1,455,200 1,819,000 2,182,800 Total Contribution Margin 2215.10 886,040 1,772,080 2,215,100 2,658,120 Less: Fixed Costs Total Fixed Cost (increase 25%) 1258.75 1,258,750 1,258,750 1,258,750 1,258,750 Operating Income 956 $ (372,710) $ 513,330 $ 956,350 $ 1,399,370