how can the changes below affect Mirabel’s overall cost structure. For those changes that are controllable, make a recommendation considering the uncontrollable cost changes. Be certain to consider not only

how can the changes  below affect Mirabel’s overall cost structure. For those changes that are controllable, make a recommendation considering the uncontrollable cost changes. Be certain to consider not only the company’s break-even point, but also the desired margin of safety. If Mirabel purchases the new equipment for $1,200,000, it will increase fixed costs by 10% but will decrease the variable cost per unit for all 3 models by 5%. If Mirabel invests the additional $650,000 in fixed marketing expenses, sales of the Model 301 are expected to increase by 8%. If the projection is that sales will increase by 10% in the coming year. The sales volume remains fixed but there is a 5% increase in variable expenses (materials cost) for the Model 101 and 301, and a 10% increase in variable expenses for Model 201. Transcribed Image Text: Mirabel Manufacturing
Budgeted Income Statement
For the Year Ending December 31
$
Sales
36,750,000
Cost of goods sold:
Variable
13,300,000
Fixed
9,300,000
Gross Margin
$
14,150,000
Selling & Administrative
$
$
$
Commissions
4,410,000
Fixed Marketing Expenses
1,350,000
Fixed Administrative
6,000,000
Net Operating Income
2,390,000
Model 101
Model 201
Model 301
Normal Annual Sales Volume
Unit Selling Price
Variable expense per unit
16,000
19,000
11,000
650
750
$
1,100
$
250
200
500
%24
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