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2. TrueBeat - Revised Cost Structure (relevant range 4,000 to 8,000 units) Average Cost per Unit Total Helpful Hints Dollars References (* *) Sales price round to whole dollar 489 [1) Sales price x 95% (whole $5) Direct materials 53 (2) Same as above Direct labor 104 (3) DL above + $18 Variable overhead 26.50 (4) 50% x DM Variable selling & admin expense 10.50 (5) VS&A above x 50% Total variable costs per unit 194.00 Add cost rows above Fixed overhead 192000 (6) FOH above x 300% Fixed selling & admin expense 512000 (7) FS&A above + 250,000 (**) References (1) Decrease sales price by 5% (95% of original sales price) (rounded to nearest whole dollar) (2) Direct Material will be unchanged from table in 1. (3) Direct Labor per unit will be increased by $18 per unit. Add $18 to the DL from table in 1. (4) Variable Overhead per unit will be equal to 50% of the Direct Material. DM from (1) x 50% (5) Variable Selling and Administrative will be reduced by half. VS&A from table in 1 x 50% (6) Fixed overhead will increase by 300%. FOH from table in 1 x 300%. (7) Fixed Selling and Administrative will increase by $250,000. FS&A from table in 1 + 50,000. Project 1: Page 3 of 14 b) What is Contribution Margin per unit, CMunit, under TrueBeats revised cost structure? The contribution margin is $295. c) Use the summarized cost structure from the table in 2 and complete the CVP Profit formula below: NOI = 295 Q - 704,00010} New Plant? Because We capacity is limited to 3,000 units in their current production facility, management would like to explore the impact of building a new production facility. The company is considering a new production facility and equipment that will decrease their variable expenses by 40% but will cause xed expenses to be 1.7 times their original amount (cost structure in 2]. TrueBeat still plans to produce and sellthe same number of units in Year 4 (base). The new plantwill give them a relevant range of 5,000 to 14,000 units. a) If the new production facility is built, what would be the company's new (1) contribution margin per unit, {ii} xed expenses and {iii} the new prot formula? i) New CM per unit ii] New Fixed expenses iii] New prot formula N0] = Q - b) Using the prot formula and cost structure 'om 10a} above, complete the table below. c) Assume Wses the same units as planned foer 4 {6,000 units) inthe new plant, calculate the new margin of safety in {i} units) (ii) dollars and {iii} percent. i) m units ii) Mos dollars iii] m percent iv] Has margin of safety improved ordeclined? Expla'mr'comment in 10 to 30 words. d) Calculate the degree of operating leverage. Has operating leverage improved or declined from the \"base" calculation in 9)? Discuss in 10 to 30 words.| e) Conclusion: If you were a member of top management, would you have been in favor of constructing the new plant? Explain in 30 to 50 words. t] Would this change your decision about the regional advertising campaign mentioned in 9'? Explain in 30 to 50 words and include calculations to support your answer. You may want to consider calculating N01, BE andfor DOL to support your