Check my work mode: This shows what is correct or incorrect for the work you have completed so far. It does 10 Problem 5-22 CVP Applications: Contribution Margin Ratio: Break-Even Analysis: Cost Structure [LO5-1, LO5-3, L05-4, L05-5, 105-6) Due to erratic sales of its sole product-a high-capacity battery for laptop computers-PEM, Inc, has been experiencing financial dimiculty for some time. The company's contribution format income statement for the most recent month is given below. Sales (19,500 units 530 per unit) Variable expenses Contribution margin Fixed expenses Net operating loss $585,000 409,500 175,500 180,000 $ (4,500) Required 1 Compute the company's CM radio and its break-even point in unt sales and dollar sales 2. The president believes that a 516,000 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an $80,000 increase in monthly sales. 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 560,000 in the monthly advertising budget, will double unit sales. If the sales manager is right, what will be the revised net operating Income fosse 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 75 cents per unit. Assuming no other changes, how many units would have to be sold each month to attain a target pront of $9750? 5. Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by 572,000 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 26,000 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) Would you recommend that the company automate its operations (Assuming that the company expects to sell 26,000)? Answer is complete but not entirely correct Complete this question by entering your answers in the tabs below. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req3 Reg 1 Reg 2 Reg4 Red SA Reg 5 Regsc Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $72,000 each month. Assume that the company expects to sell 26,000 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.) Show less PEM, Inc. Contribution Income Statement Not Automated Per Total Total Automated Per Unit S 30 S 5 30 100 750,000 100 30 18 40 780,000 546.000 234.000 180.000 54000 468,000 312 000 3 21 70 IS Sales Variable expenses Contribution margin Found expenses Net operating income 12 60 252,000 60.000