5A) 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. 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 (i.e., 0.234 should be entered as "23") and other answers to the nearest whole number.)

CM ratio		%
Break-even point in unit sales
Break-even point in dollar sales

5B)

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 20,400 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.)

PEM, Incorporated
Contribution Income Statement
	Not Automated			Automated
	Total	Per Unit	%	Total	Per Unit	%
	0	$0	0	0	$0	0
	$0			$0

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 20,400 units)?

	Yes No

Due to erratic sales of its sole product-a high-capacity battery for laptop financial difficulty for some time. The company's contribution format incon Sales (12,700 units * $20 per unit) Variable expenses Contribution margin Fixed expenses Net operating loss $ 254,000 127,000 127,000 142,000 $ 15,000) Required: 1. Compute the company's CM ratio and its break-even point in unit sales = 2. The president believes that a $6,700 increase in the monthly advertising staff, will increase unit sales and the total sales by $85.000 per month. If th the company's monthly net operating income? 3. Refer to the original data. The sales manager is convinced that a 10% rec $36,000 in the monthly advertising budget, will double unit sales. If the sal income (loss)? 4. Refer to the original data. The Marketing Department thinks that a fancy sales. The new package would increase packaging costs by $0.60 per unit to be sold each month to attain a target profit of $4.7007 5. Refer to the original data. By automating the company could reduce var would increase by $56.000 each month a. Compute the new CM ratio and the new break-even point in unit sales b. Assume that the company expects to se 20.400 units next month Pre assuming that operations are not automated and one assuming that they well as in total, for each alternative.) c. Would you recommend that the company automate its operations Ass