Can you help me answer $5-8?$The Accounting Department has provided the following data concerning the proposed new product:

The classic$-$elite bike frames could be produced with existing equipment and personnel. Manufacturing overhead is

allocated to the products based on direct labor hours. Most of the manufacturing overhead consists of fixed

common costs such as rent on the factory building, but some of it is variable. The variable manufacturing overhead

has been estimated at $$3\mathrm{.}75$ per drum and $97\mathrm{.}50$ per bike frame. The variable manufacturing overhead cost

would not be incurred on drums acquired from an outside supplier.

Selling and administrative expenses are allocated to the products based on revenues. Almost all of the selling and

administrative expenses are fixed common costs, but it has been estimated that variable selling and administrative

expenses amount to $48\mathrm{.}70$ per drum and $$77\mathrm{.}10$ per bike frame.

All of the firm's employees $-$ direct and indirect $-$ are paid for full $40-$hour workweeks and the company has a policy

of laying off workers only in major recessions.

$N$&$M$ Company $(N$&$M)$

N & M Company is into furniture business specialized in dining sets. Last year, sales volume totaled $$850,000.$

Volume for the first five months of the current year totaled $$600,000,$ and sales were expected to be $P1,600,000$

for the entire year. Unfortunately, the furniture business in the region where N & M is located, specifically, wood

dining sets, is very competitive. More than $100$ dining set shops are all competing for the same business.

The company offers two different quality wood dining sets: Narra and Molave, with Narra being the higher quality.

The average unit selling prices, unit variable costs, and direct fixed costs are as follows:

Common fixed costs $($fixed cost not traceable to either dining sets$)$ are $$35,000.$ Currently, for every three Narra

dining sets sold, seven Molave dining sets are sold.

Required $5.$ Calculate the number of Narra and Molave dining sets that are expected to be sold during the current

year.

Required $6.$ Calculate the number of Narra and Molave dining sets that must be sold to break$-$even.

Required $7.$ N & M can buy computer$-$controlled machines that will make production of the dining sets faster

and meet the demands of the customers. If the machines are purchased, the variable costs for each

type of dining set will decrease by $9$ percent, but the common fixed costs will increase by $$44,000.$

Compute the effect on operating income, and also calculate the new break$-$even point. Assume the

machines are purchased at the beginning of the sixth month. Fixed costs for the computer are

incurred uniformly throughout the year.

Required $8.$ Refer to the original data. N & M is considering adding a retail outlet. This will increase common

fixed costs by $$70,000$ per year. As a result of adding the retail outlet, the additional publicity and

emphasis on quality will allow the firm to change the sales mix to $1$:$1.$ The retail outlet is also

expected to increase sales by $30$ percent. Assume that the outlet is opened at the beginning of the

sixth month.

Calculate the effect on the company's expected profits for the current year, and calculate the new

break$-$even point. Assume that fixed costs are incurred uniformly throughout the year.