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:

Required:

Compute the company's CM ratio and its break$-$even point in unit sales and dollar sales.

The president believes that a $$6,600$ increase in the monthly advertising budget, combined with an intensified

effort by the sales staff, will increase unit sales and the total sales by $$81,000$ per month. If the president is right,

what will be the increase $($decrease$)$ in the company's monthly net operating income?

Refer to the original data. The sales manager is convinced that a $10\%$ reduction in the selling price, combined

with an increase of $$37,000$ in the monthly advertising budget, will double unit sales. If the sales manager is right,

what will be the revised net operating income $($loss$)?$

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\mathrm{.}70$ per unit. Assuming no other

changes, how many units would have to be sold each month to attain a target profit of $$4,000?$

Refer to the original data. By automating, the company could reduce variable expenses by $$3$ per unit. However,

fixed expenses would increase by $$57,000$ 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 $20,600$ 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

$20,600$ units$)?$