Ambrose Co$.$ is considering making some changes. If these changes are made, Fixed Costs could decrease by $$60$ but variable cost per unit would increase by $$0\mathrm{.}12.$ After analyzing the potential results of this change, Ambrose Co$.$ decides to make the change, but to decrease the selling price of the product by $$0\mathrm{.}15$ and is confident that with such a decrease in priced the company can sell $15$ more units.

Given the current situation of:

Sale prices per unit $$1\mathrm{.}80$

Variable cost per unit $\mathrm{.}40$

Fixed Costs $400$

Break Even in units $286$

Break Even in dollars $$515$

Expected units sold $825$

Now do the following:

$1.$ Prepare a contribution margin income statement for the current situation

$2.$ Prepare a contribution margin income statement reflecting the changes in costs only

a$.$ What is the break even in units and dollars in this scenario?

$3.$ Prepare the contribution margin income statement with the changes in costs as well as the changes in sales price and quantity sold.

a$.$ What is the break even in units and dollars in this scenario?

$4.$ Calculate the margin of safety in units and margin of safety percentage for each of the $3$ scenarios $($in requirements $1-3)$

$5.$ Calculate the operating leverage in each of the $3$ scenarios

$6.$ If in scenario $3,$ sales were to increase by $10\%,$ what kind of percentage increase would Ambrose Co see in Net Income

$7.$ Prepare the contribution margin format income statement, using scenario $3$ and considering an increase in sales of $10\%.$ Does the Net income increase as you predicted in requirement $6?$