palms Morton Company’s contribution format income statement for last month is given below: Sales (41,000 units 3′ $24 per unit.) 3 934,000 Variable…


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palms Morton Company's gift format grantance declaration for latest month is ardent below: Sales (41,000 items 3‘ $24 per item.) 3 934,000Variable expanses 638.. 900Contribution loophole 295 .. 2 00Fixed expenses 236, 160Net: frank grantance 5: 59 . 040 The assiduity in which Morton Guild operates is wholely impressible to cyclical movements in the dispensation. Thus. profits varyconsiderably from year to year according to public economic provisions. The guild has a extensive sum of unused size and isstudying ways of beseeming profits. Required: ‘|. New equipment has conclude onto the negotiate that would grant Morton Guild to automate a duty of its operations. Variableexpenses would be gentle by $7.20 per item. However, fixed expenses would growth to a whole of $531,360 each month. Preparetwo gift format grantance declarations. one showing offer operations and one showing how operations would show if thenew equipment is lapsed. 2. Refer to the grantance declarations in [1]. For the offer operations and the contemplated new operations. value (a) the quantity offrank leverage. [in] the break-even aim in dollar sales. and (c) the loophole of security in dollars and the loophole of security percentage.3. Refer frequently to the axioms in [1). As a director. what constituent would be paramountin your belief in deciding whether to lapse the newequipment? (Assume that sufficient funds are helpful to gain the lapse.) 4. Refer to the initiatory axioms. Rather than lapse new equipment. the negotiateing director argues that the oompa ny's negotiateingstrategy should be modifiable. Rather than pay sales commissions. which are currently interposed in mutable expenses. the guildwould pay salespersons urban salaries and would endue heavily in advertising. The negotiateing director claims this new entrance wouldgrowth item sales by 30% externally any modify in selling price; the guild's new monthly fixed expenses would be $376,872; and itsnet frank grantance would growth by 20%. Value the guild's brea k-even aim in dollar sales below the new negotiateingstrategy.
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