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The company is considering a purchase of equipment that would reduc its direct labor costs by $104,000 and would change its manufacturing overhead costs to

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The company is considering a purchase of equipment that would reduc its direct labor costs by $104,000 and would change its manufacturing overhead costs to 30% variable and 70% fixed (assume total manufacturing overhead cost is $350,000, as above). It is also considering switching to a pure commission basis for its sales staff. This would change selling expenses to 90% variable and 10% fixed (assume total selling expense is $250,000, as above). Compute (1) the contribution margin and (2) the contribution margin ratio, and recompute (3) the break-even point in sales dollars. (Round contribution margin ratio to 2 decimal ploces, eg 0.55 and oll other answers to O decimal ploces, es. 2,520. Use the current year numbers for calculations.) 1. Contribution margin 2. Contribution margin ratio 3. Break-evenpoint

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