The company has a large amount of unused capacity and is studying ways of improving profits. Its business is neither cyclical nor significantly sensitive to a change in the general economic situation. New equipment has come on the market that would allow Eli Company to automate a portion of its operations to increase its scale of economy and to reduce unused capacity. Variable costs would be reduced by $4.25 per unit. However, fixed costs would increase by $189,000 each month. Required: Part 1: or the proposed new operations, compute clearly (i) the degree of operating everage (DOL), and (ii) the break-even-point in units of sales (BEP). (10 marks) The company has a large amount of unused capacity and is studying ways of improving profits. Its business is acither cyclical nor significantly sensitive to a change in the general economie situation. New equipment has come on the market that would allow Eli Company to automate a portion of its operations to increase its scale of economy and to reduce unused capacity. Variable costs would be reduced by $4.25 per unit. However, fixed costs would increase by, $189,000 each month. Required: Part 2: Refer to the original data. Rather than purchase new equipment, the marketing manager argues that the comparly's marketing strategy should be changed. Instead of paying sales commissions, which are included in variable expenses, the marketing manager suggests that salespeople be paid fixed salaries and that the company invest heavily in advertising. The marketing manager claims that this new approach would increase unit sales by 30% without any change in selling price, the company's hew monthly fixed expenses would be $297,000, and its operating income would crease by 12%. Compute the break-even point in dollar sales for the company nder the new marketing strategy. Do you agree with the marketing manager's onosal? Elicomnanv's current break-even-noint in dollar sales is $60000017