Question - Lush Lawn, Inc. produces and sells electric lawn trimmers for $120 each. The variable costs of each mower total $80 while total monthly fixed costs are $6,000. Current monthly sales are $48,000. The company is considering a proposal that will decrease the selling price by 10%, increase monthly fixed costs by 50% and increase unit sales to 450 units per month.
1) Compute the company's current break even point in units and dollars before the proposal.
2) What is the company's current margin of safety in units and sales dollars and percentage before proposal?
3) Compute the company's new break even point in units and dollars assuming the proposal is accepted.
4) Compute the company's margin of safety in units assuming the proposal is accepted.
5) Compute the increase or decrease in profit assuming the proposal is accepted.