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Unitech, Inc. manufactures computers. One of the company's products, a laptop computer, sells for $200. The computers are manufactured in a plant that relies heavily
Unitech, Inc. manufactures computers. One of the company's products, a laptop computer, sells for $200. The computers are manufactured in a plant that relies heavily on direct labor workers. Thus, variable costs are high, totaling $150 per computer. Over the past year the company sold 300 computers, with the following operating results: (25 pts.) 1. Compute: (a) the CM ratio; (b) the break-even point in number of computers; and (c) the breakeven point in \$ sales. 2. Compute the margin of safety. 3. Due to an increase in labor rates, the company estimates that variable costs will increase by $20 per computer next year. If this change takes place and the selling price per computer remains constant at $200, what will be: (a) the new CM ratio; (b) the new break-even point in number of computers?; and (c) the net income. 4. Refer to the original data. The company is considering the construction of a new, automated plant to manufacture the computers. The new plant would cut variable expenses per unit by 50%, but it would cause fixed costs to increase by 95%. If the new plant is built, what would be the company's: (a) new CM ratio; (b) new break-even point in number of computers; and (c) new net income
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