$N$&$M$ 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 $$1,600,000$ 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.

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.