(a)
Compute and interpret the contribution margin ratio under each approach.
(b)
Compute the break-even point in sales dollars under each approach.
Discuss the implications of the findings.
(c)
Compute the margin of safety ratio under each approach, and interpret the findings.
(d)
Compute the degree of operating leverage for each approach at current sales levels, and find the way in which there would be a decline in the net income of the company under each approach with a 10% decline in sales.
(e)
Compute the level of sales at which the net income of the Company would be the same under either approach.
(f)
Discuss the issues that the Company must consider in making the decision.
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