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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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\table[[Account Title,Debit,Credit],[Cash,$18,000,],[Supplies,11,800,],[Prepaid insurance,2,000,],[Equipment,23,000,],[Accumulated depreciation-Equipment,,$6,500 \table[[Number,Account Title,Debit,Credit],[101,Cash,$18,000,],[126,Supplies,11,800,],[128,Prepaid insurance,2,000,],[167,Equipment,23,000,],[168,Accumulated depreciation-Equipment,,$ 6,500],[307,Common stock,,1,582],[318,Retained earnings,,41,600],[319,Dividends,6,000,],[403,Services revenue,,47,760],[612,Depreciation...