Due to erratic sales of its sole producta high-capacity battery for laptop computersPEM, Inc., has been experiencing difficulty for some time. The company's contribution format income statement for the most recent month is given below:

Sales (12,700 units at $30 per unit)	$381,000
Variable expenses	228,600
Contribution margin	152,400
Fixed expenses	170,400
Net operating loss	$(18,000)

Requirement 5:

Refer to the original data. By automating certain operations, the company could reduce variable costs by $3 per unit. However, fixed costs would increase by $59,000 each month.

(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.)