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pare X Para X wha X The management is anxious to improve the company's profit performance and has asked for several items of information. Required: 1. Compute the company's contribution ratio and variable expense ratio 2. Compute the break-even point in both units and sales in shillings. Use the equation method showing your workings 3. Assume that sales increase by Sh. 440,000 next year. If the cost behavior patterns remain constant, by how much will the company's profit increase. Use the contribution margin ratio to determine your answer. 4. Making reference to the original data. Assume that next year management wants the company to earn a minimum profit of Sh. 100,000. How many units will have to be sold to meet this target profit. 5. In effort to increase sales and profits, management is considering the use of higher quality machine. The higher quality machine would increase variable cost by Sh. 4 per unit, but management could eliminate on quality supervisor who is paid a salary of Sh. 40,000 per year. The sales director estimates that the higher quality machine would increase annual sales by 15%. Required: 6. Assuming that changes made are made as detailed above, prepare a projected profit statement of profit or loss for next year. Show data on a total, per unit, and percentage basis (Hint: use the format of the above table) 7. Compute the company's new break even point in both units and sales in shillings. Use the contribution margin method Would recommend that the changes be made. Explain.

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