windowpro.com is exploring ways to improve the efficiency of its production process and increase profitability. They produced 400 garage doors in 2019. windowpro.com contribution margin income statement for the year ended December 31, 2019 is given below:

Total Per Unit

Sales $960,000 $2,400.00

Variable expenses 440,000

Contribution margin 520,000

Fixed expenses 240,000

Net operating income $280,000

What If #1:

1. The company has undertaken several sustainability projects over the past couple of years. Currently, management is evaluating whether to develop a comprehensive software control system for its manufacturing operations that would significantly reduce scrap and waste generated during the manufacturing process. If the company were to implement this software control system in its manufacturing operations, the use of the software control system would result in an increase of $120,000 in its annual fixed costs while the variable manufacturing cost per door would drop by $240. If the software control system were to be developed and implemented, determine the companys new break-even point in sales dollars and units, contribution margin ratio, margin of safety, operating leverage, and net income.

Explanation: (2 pts.)

On your data block page: Do you think the company should implement the software control system? Why or why not? What factors should the company consider before implementing the software control system?

What If #2:

2. Refer to the original data. The companys sales manager believes that a reduction of 5% in the sales price ($120) combined with a $30,000 increase in advertising would increase annual sales by 100 units (windows). Recalculate the companys new break-even point in sales dollars and units; contribution margin ratio, margin of safety, operating leverage, and net income.