Snowridge Manufacturing has a factory that produces custom bathroom cabinets. Should the company consider the changes from Schedule-6 showing below? 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. . 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 ($) $ 2,017,050 O O