1 Problem 6-22 (Algo) CVP Applications: Contribution Margin Ratio: Break-Even Analysis; Cost Structure [LO6-1, LO6-3, LO6-4, LO6-5, LO6-6) Due to erratic sales of its sole product a high-capacity battery for laptop computers--PEM, Incorporated, has been experiencing financial difficulty for some time. The company's contribution format income statement for the most recent month is given below Sales (1),100 units . $per unit) $ 193,000 Variable penses 196, SO Contribution margin 196,500 ved expenses 219.000 Not operating loss 5 (22,500) Required: 1. Compute the company's CM ratio and its break even point in unitates and collar sales 2. The president believes that $2000 Increase in the monthly advertising budget combined with an intensified etfort by the sales stoff will increase unit sales and the total sales by $88.000 per month. If the president is right, what will be the increase (decrease in the company's monthly net operating income? 3. Refer to the original data, the sales manager is convinced that a 10% reduction in the selling price.combined with an increase of $31000 in the monthly advertising budget, will double unit sales. If the sales manager is right, what will be the revised net operating Income foss)2 4 Refer to the original data. The Morketing Department thinks that a fancy new package for the laptop computer battery would grow sales. The new package would increase packaging costs by $040 per unit. Assuming no other changes, how many units would have to be sold each month to attain a forget profit of $5,000? 5. Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $56,000 each month a Compute the new CM ratio and the new break even point in unit sales and dollar sales b. Assume that the company expects to sell 20.700 units next month. Prepare two contribution format income statements, one assuming that operations are not automated and one assuming that they are (Show data on a per unit and percentage basis, is well as in total for each alternative) Would you recommend that the company automate its operations (Assuming that the company expects to sell 20700 units? 1 to de soia each monun to attain a target pront of 35.000! 5. Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $56,000 each month. a. Compute the new CM ratio and the new break even point in unit sales and dollar sales. b. Assume that the company expects to sell 20.700 units next month. Prepare two contribution format income statements, one assuming that operations are not automated and one assuming that they are. (Show data on a per unit and percentage basis, as well as in total, for each alternative.) c. Would you recommend that the company automate its operations (Assuming that the company expects to sell 20,700 units)? Complete this question by entering your answers in the tabs below. Reg 2 Reg 3 Reg 1 Reg 4 Red SA Reg 58 Req 50 Compute the company's CM ratio and its break even point in unit sales and dollar sales. (Do not found intermediate calculations. Round "CM ratlo" to the nearest whole percentage (ie, 0.234 should be entered as "23"), CM ratio Break-even point in unit sales Break even point in dollar sales KRAG Req2 > 1 1 to be sia acn month to attain a target pronto UVUT 5. Refer to the original data. By automating, the company could reduce variable expenses by 53 per unit. However, fxed expenses would increase by $56.000 each month. a. Compute the new CM ratio and the new break-even point in unt sales and dollar sales b. Assume that the company expects to sell 20.700 units next month. Prepare two contribution format income statements one assuming that operations are not automated and one assuming that they are. (Show data on a per unit and percentage basis, as well as in total, for each alternative) c. Would you recommend that the company automate its operations (Assuming that the company expects to sell 20.700 units? 5 points Complete this question by entering your answers in the tabs below. Reg 2 Rega Reg 1 Reg4 Red RSB Hea SC The president believes that a $7,000 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will increase unit sales and the total sales by $80,000 per month. If the president is right, what will be the Increase (decrease in the company's monthly net operating income? (Do not round Intermediate calculations) by Gloueur Sed 4. Peter to the onginai ataine Marketing Department thinks inat a tancy new package for the saptop computer battery wound grow sales. The new package would increase packaging costs by $0.40 per unit. Assuming no other changes, how many units would have to be sold each month to attain a target profit of $5,000? 5. Refer to the original data. By automating, the company could reduce variable expenses by 53 per unit. However, fixed expenses would increase by $56,000 each month, a. Compute the new CM ratio and the new break even point in unit sales and dollar sales b. Assume that the company expects to sell 20700 units next month. Prepare two contribution format income statements, one assuming that operations are not automated and one assuming that they are. (Show data on a per unit and percentage basis, as well as in total, for each alternative.) c. Would you recommend that the company automate its operations (Assurning that the company expects to sell 20.700 units)? Complete this question by entering your answers in the tabs below. Reg1 Reg 2 Req3 Reg 4 Reg SA Reg 50 Reg SC Refer to the original data. The sales manager is convinced that a 10% reduction in the selling price, combined with an Increase of $31,000 in the monthly advertising budget, will double unit sales. If the sales manager is right, what will be the revised net operating income (loss)7 (Losses should be entered as a negative value.) Rovised not operating income foss) 1 to be sold each month to attain a target pront Or $5.000 S. Refer to the original data. By automating the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $56.000 each month. a. Compute the new CM ratio and the new break even point in unit sales and dollar sales. b. Assume that the company expects to sell 20.700 units next month. Prepare two contribution format income statements, one assuming that operations are not automated and one assuming that they are. (Show data on a per unit and percentage basis, as well as in total, for each alternative.) c. Would you recommend that the company automate its operations (Assuming that the company expects to sell 20.700 units)? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Reg 4 Reg 50 Reg SC Reg 5 Refer to the original data. The Marketing Department thinks that a fancy new package for the laptop computer battery would grow sales. The new package would increase packaging costs by $0.40 per unit. Assuming no other changes, how many units would have to be sold each month to attain a target profit of $5,000? (Do not round intermediate calculations. Round final answer to the nearest whole unit.) Show less Unit sates to attain target pront 1 to be sold each month to attain a target pront of 5.000! 5. Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, foed expenses would increase by $56,000 each month. a. Compute the new CM ratio and the new break even point in unit sales and dollar sales b. Assume that the company expects to sell 20.700 units next month. Prepare two contribution format income statements, one assuming that operations are not automated and one assuming that they are. (Show data on a per unit and percentage basis, os well as in total, for each alternative) c. Would you recommend that the company automate its operations (Assuming that the company expects to sell 20.700 units)? Complete this question by entering your answers in the tabs below. Reg 1 Rega Reg 2 Reg 4 Reg 5 Hey SA Hey SC Refer to the original data. By automating, the company could reduce variable expenses by $) per unit. However, fixed expenses would increase by $56,000 each month Compute the new CM ratio and the new break even point in unit sales and dollar sales. (Do not round intermediate calculations. Round "CM ratio to the nearest whole percentage (0.234 should be entered as "23") and other answers to the nearest whole number) Show less CM ratio Break-even point in unit Sales Break even point in dollar sales edep W assuming that operations are not automated and one assuming that they are. (Show data on a per unit and percentage basis, as well as in total, for each alternative.) c. Would you recommend that the company automate its operations (Assuming that the company expects to sell 20700 units)? 1 Complete this question by entering your answers in the tabs below. 15 Reg 1 Reg 2 Reg 3 Reg 4 Reg SA Reg 58 Req SC Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $56,000 each month. Assume that the company expects to sell 20,700 units next month. Prepare two contribution format income statements, one assuming that operations are not automated and one assuming that they are. (Show data on a per unit and percentage basis, as well as in total, for each alternative.) (Do not round your intermediate calculations Round your percentage answers to the nearest whole number) Show less PEM, Incorporated Contribution Income Statement Not Automated Total Per Unit Automated Per Unit Total wy 1 to be sold each month to attain a target profit of $5,000? 5. Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $56,000 each month, a. Compute the new CM ratio and the new break-even point in unit sales and dollar sales b. Assume that the company expects to sell 20.700 units next month. Prepare two contribution format income statements, one assuming that operations are not automated and one assuming that they are. (Show data on a per unit and percentage basis, as well as in total, for each alternative.) c. Would you recommend that the company automate its operations (Assuming that the company expects to sell 20.700 units)? ats Complete this question by entering your answers in the tabs below. Req1 Reg 2 Reg 3 Reg 4 Red 5A Reg 5B Reg 5C Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $56,000 each month. Would you recommend that the company automate its operations (Assuming that the company expects to sell 20.700 units)? OYes ONO