ACC 212 MANAGERIAL ACCOUNTING -SECTION 1 -12 Memofax, Inc., produces a single product. Sales have been very erratic, with some months showing a profit and some months showing a loss. The company's income statement for the most recent month is given below Sales (13,500units at $20) Less: Variable expenses Contribution margin Less Fixed Expenses Net Loss $270,000 189,000 81,000 90,000 $ NOTE: For any requirements below that request the impact on net income for any potential changes in costs or sales price, use the INCREMENTAL CONTRIBUTION MARGIN APPROACH (1) Compute the company's CM ratio and its break-even point in both units and dollars (2) The sales manager feels that an $8,000 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an increase of 3,500 units in monthly sales. If the sales manager is right, what will be the effect on the company's monthly net income or loss? (3) The president is convinced that a 10% reduction in the selling price, combined with an increase of $35,000 in the monthly advertising budget, will cause unit sales to double. What will be the impact on net income if these changes do take place? (4) Refer to the original data. The company's advertising agency thinks that a new package for the company's product would help sales. The new package being proposed would increase packaging costs by $0.60 per unit. Assuming no other changes in cost behavior, how many units would have to be sold each month to earn a profit of $4,500? (5) Refer to the original data. By automating certain operations, the company could slash its variable expenses in half. However, fixed costs would increase by $118,000 per month (A) Compute the new CM ratio and the new break-even point in both units and dollars (B) Assume that the company expects to sell 20,000 units next month. What will be the impact on net income if the company goes ahead with the automation noted above? (C) Is this automation a good move for the company? Why or why not