Luxlawn, Inc. produces and sells electric lawn mowers for $220 each. The variable costs of each mower total $160 while total monthly fixed costs are $24,000. Current monthly sales are $110,000. The company is considering a proposal that will increase the selling price by 10%, increase total fixed costs by 10% and increase unit sales to 600 units per month.
Required:
1) Compute the company's current break-even point in units and dollars.
2) What is the company's current margin of safety in units, dollars, and percentage?
3) Compute the company's margin of safety in units assuming the proposal is accepted.
4) Compute the increase or decrease in profit assuming the proposal is accepted