Due to erratic sales of its sole producta high-capacity battery for laptop computersPEM, Incorporated, has been experiencing financial difficulty for some time. The companys contribution format income statement for the most recent month is given below: Sales (13,000 units $30 per unit) $ 390,000 Variable expenses 195,000 Contribution margin 195,000 Fixed expenses 217,500 Net operating loss $ (22,500)

Required: 1. Compute the companys CM ratio and its break-even point in unit sales and dollar sales.

2. The president believes that a $6,200 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will increase unit sales and the total sales by $83,000 per month. If the president is right,