Due to erratic sales of Iits sole product-a high-capacity battery for laptop computers-PEM, Inc., has been experlencing financial difficulty for some time. The company's contribution format Income statement for the most recent month is glven below Sales (13,388 unitsx $28 per unit) Variable expenses Contribution margin Fixed expenses Net operating loss $ 266,e68 159,688 186,488 118,488 s (12,808) Required: 1. Compute the company's CM ratlo and Its break-even polnt In unlt sales and dollar sales. 2. The presldent belleves that a $6700 Increase In the monthly advertising budget, comblned wlth an Intensified effort by the sales staff, will result In an $82.000 Increase In monthly sales. If the presldent 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 ls convinced that a 10% reduction In the selling price, combined with an increase of $37000 In the monthly advertising budget, will double unit sales. If the sales manager is right, what wll be the revised net operating Income (loss)? 4. Refer to the orlginal 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 0.50 cents per unit. Assuming no other changes, how many units would have to be sold each month to attalna target profit of $5,000? 5. Refer to the orlginal data. By automating. the company could reduce varlable expenses by $3 per unit. However, fixed expenses would Increase by $59,000 each month. a. Compute the new CM ratio and the new break-even polnt In unlt sales and dollar sales. b. Assume that the company expects to sell 20,700 unlts 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 20,700)