The following monthly data in contribution format are available for the MN Company and its only product,
Product SD:
			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 produced and sold 300 units during the month and had no beginning or ending inventories.
Required:
c) Assume that MN 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 $22 per unit and increasing
the advertising budget by $20,000 per month. Management believes that these actions will increase
unit sales by 50 percent. Should these changes be made?
d) Assume that MN 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 in an increase in monthly sales of 12%. Should these
changes be made?