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:

Sales $(13,100$ units $\backslash$times $$20$ per unit$)$ $ $262,000$

Variable expenses $131,000$

Contribution margin $131,000$

Fixed expenses $146,000$

Net operating loss $ $(15,000).$ Refer to the original data. By automating, the company could reduce variable expenses by $$3$ per unit. However, fixed expenses would increase by $$52,000$ each month.

Compute the new CM ratio and the new break$-$even point in unit sales and dollar sales.

Assume that the company expects to sell $20,500$ 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.$)$

Would you recommend that the company automate its operations $($Assuming that the company expects to sell $20,500$ units$)?$