Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

can someone please explain Req 3 and 5B. I do not understand what im doing wrong? Due to erratic sales of its sole product-a high-capacity

can someone please explain Req 3 and 5B. I do not understand what im doing wrong?
image text in transcribed
image text in transcribed
image text in transcribed
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 Sates (13,000 units * $30 per unit) $ 390,000 Variable expenses 234,000 Contribution margin 156,000 Fixed expenses 174,000 Net operating loss $ 18,000) Required: 1. Compute the company's CM ratio and its break even point in unit soles and dollar sales 2. The president believes that a $6100 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will increase unit soles and the total sales by $82,000 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 $38,000 in the monthly advertising budget will double unit sales. If the sales manager is right, what will be the revised net operating Income (oss)? 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 $4,800? 5. Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $55,000 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 20.400 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.) Wild you recommend that the company automate its operations (Assuming that the company expects to sell 20.400 units? Complete this question by entering your answers in the tabs below. Req1 Reg 2 Reg 3 Reg 4 Reg SA Req 5B Reg 5C Refer to the original data. The sales manager is convinced that a 10% reduction in the selling price, combined with an increase of $38,000 in the monthly advertising budget, will double unit sales. If the sales manager is right, what will be the revised net operating income (loss)? (Losses should be entered as a negative value) Revised net operating income (loss) Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $55,000 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.) Show less PEM, Incorporated Contribution Income Statement Not Automated Total Per Unit % Automated Per Unit Total $ 0 0 0 0 0 0 $ $ 0

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting, Chapters 1-13

Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac

25th Edition

1285069625, 9781285069623

More Books

Students also viewed these Accounting questions

Question

Describe the importance of global talent management.

Answered: 1 week ago

Question

Summarize the environment of recruitment.

Answered: 1 week ago