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The company is considering a purchase of equipment that would reduce its direct labor costs...

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Accounting

The company is considering a purchase of equipment that would reduce its direct labor costs by 104,000 and would change its manufacturing overhead costs to 30% variable and 70% fixed (assume total manufacturing overhead cost is 350,000, as above) it is also considering switching to a pure commission basis for its sales staff. This would change selling expenses to 90% variable and 10% fixed (assume total selling expense is 250,000, as above) compute (1) the contribution margin and (2) the contribution margin ratio % and recompute (3) the break even point in sales dollars.

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