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Sandhill Modernas of Juarez, Mexico, is contemplating a major change .pdf

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Sandhill Modernas is considering replacing its skilled draftsmen with a computerized drafting system to change its cost structure but wants to understand the consequences since its business volume varies yearly. The document provides CVP income statements for the manual and computerized systems to analyze the impact of the potential change.

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Sandhill Modernas of Juarez, Mexico, is contemplating a major change in its cost structure. Currently, all of its drafting work is performed by skilled draftsmen. Fafael Jiminez, Sandhill's owner, is considering replacing the draftsmen with a computerized drafting system. However, before making the change, Rafael would like to know the consequences of the change. since the volume of business. varies significantly from year to year. Shown below are CVP income statements for each alternative. Degree of Operating Leverage Manual System Computerized System

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