Algo) CVP Applications; Contribution Margin Ratio; Break-Even Analysis; Cost Structure (LO6-1, L06-3, L06-4, L06-5, L06-6) 142,000 Due to erratic sales of its sole product-a high-capacity battery for laptop computersPEM, Incorporated, has been experiencing financial difficulty for some time. The company's contribution format Income statement for the most recent month Is given below: Salon (12,700 unite * $20 per unit) $ 254,000 Variable expenses 127.000 Contribution margin 127,000 Fixed expennen Net operating lose $(15,000) Required: 1. Compute the company's CM ratio and its break-even point in unit sales and dollar sales. 2. The president belleves 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 $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 $33,000 in the monthly advertising budget, will double unit sales. If the sales manager is right, what will be the revised net operating Income (loss)? 4. 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 $0.60 per unit. Assuming no other changes, how many units would have to be sold each month to attain a target profit of $4,400? 5. Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $51,000 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 20,900 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 20,900 units)? Reg 1 Reg 2 Req3 Reg 4 Reg 5 Reg 58 Reg 5C Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, forced expenses would increase by $51,000 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 ration to the nearest whole percentage (1.0., 0.234 should be entered as "23") and other answers to the nearest whole number.) Show less 35 % CM ratio Break-even point in unit sales Break-even point in dollar sales 14,846 551,429 $ Reg 1 Reg 2 Reg 3 Reg 4 Reg 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 $51,000 each month. Assume that the company expects to sell 20,900 units next month. Prepare two contribution format Income statements, one assuming that operations are not automated and one assuring 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 Por Unit 418,000 $ 20 100 $ 209,000 10 50 209,000 $ 10 50 142.000 67,000 Sales Variable expenses Contribution margin Fixed expenses Not operating income 100 + Automated Total Por Unit 418,000 $ 20 271,700 146,300 $ 20 142,000 4,300 100 $ Req1 Reg 2 Reg3 Reg 4 Reg SA Reg 58 Req 5C Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fored expenses would increase by $51,000 each month. Would you recommend that the company automate its operations (Assuming that the company expects to sell 20,900 units)? Yos ONO