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

Sales (13,300 units $20 per unit)	$	266,000
Variable expenses		159,600
Contribution margin		106,400
Fixed expenses		118,400
Net operating loss	$	(12,000)
2. a) The president believes that a $6,800 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an $86,000 increase in monthly sales. If the president is right, what will be the effect on the companys monthly net operating income or loss? (Use the incremental approach in preparing your answer.) Increases or decreases by ________?

b) Refer to the original data. The Marketing Department thinks that a fancy new package for the laptop computer battery would help 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 earn a profit of $4,800? (Do not round your intermediate calculations. Round your final answer to nearest whole number.)

Sales Units: __________