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. Required: (each point is separate) 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? b. What is the sales volume required to achieve a target profits margin 20%? c. Management wants to increase sales and feels this can be done by cutting the unit selling price by $22 and increasing the advertising budget by $20,000 per month. Management believes that these actions will increase unit sales by 50%. Should these changes be made? d. An order has been received from an overseas customer for 125 units to be delivered this month at a special discounted price of $95. This order would have no effect on the company's normal sales and would not change the total amount of the company's fixed costs. If the offer is accepted, only 20% of variables expenses will be avoided. By how much would this special-order increase (decrease) the company's net operating income for the month? e. MN Co. is expecting to experience severe financial difficulties and has applied for a large guaranteed loan. As a condition for obtaining the guarantee, the Bank mandates that the company significantly reduce its break-even point. Highlight and discuss with examples all possible strategies a company might consider to meet required conditions (500 words max).