CASE STUDY (2) (Mark 35%): The following monthly data in contribution format are available for the MN Co. and its only product: Total Per Unit Sales. $83,700 $279 Variable expenses. 32,700 109 Contribution margin 51,000 $170 Fixed expenses. 40,000 Net operating income. $11,000 The Company is currently using 70% of its available capacity. selling 300 units of product per month.

a. Management is contemplating the use of plastic gearing rather than metal gearing in its product. This change would reduce variable expenses by $18 per unit. The company's sales manager predicts that this would reduce the overall quality of the product and thus would result in a decline in sales to a level of 250 units per month. Should this change be made?