the following monthly data in contribution format are available for Rhys company and its only product , product SD

Total per unit

Sales $83,000 $279

variable expenses $32,700 $109

contribution margin $51,000 $170

fixed expenses $40,000

Net operating income $11,000

scenario b,c are independent of each other, show calculation for b,c and d

Without resorting to calculations, what is the total contribution margin at the break

even point?

b. Management is contemplating the use of plastic gearing rather than metal gearing in

Product SD This change would reduce variable expenses by SIS 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?

c, Assume that Rhys Company is currently selling 300 units of Product SD per month.

Management wants to increase sales and feels this can be done by cutting the selling

price by 522 per unit and increasing the advertising budget by $20,000 per month,

Management believes that these actions increase unit sales by 50%. Should these

changes be made?

d. Assume that Rhys Company is currently selling 300 units of Product SD.

Management wants to automate a portion of the production process for Product SD

The new equipment would reduce direct labor costs by $20 per unit but would result

in a monthly rental cost for the new robotic equipment of $10,000. Management

believes that the new equipment will increase the reliability of Product SD thus

resulting an increase in monthly sales of 12%. Should these changes be made?