Due to erratic sales of its sole product-a high-capacity battery for laptop computers PEM, Inc., has been experiencing difficulty for some time. The company's contribution format income statement for the most recent month is given below: Sales (12,900 units $20 per unit) Variable expenses $258,000 154,800 Contribution margin Fixed expenses 103,200 115,200 Net operating loss S (12,000) Required 1. Compute the company's CM ratio and its break-even point in both unit sales and dollar sales CM ratio Break-even point in units Break-even point in dollars 40 % 2. The president believes that a $6,900 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an $82,000 increase in monthly sales. If the president is right, what will be the effect on the company's monthly net operating income or loss? (Use the incremental approach in preparing your answer.) Increases by 3. Refer to the original data. The sales manager is convinced that a 10% reduction in the selling price combined with an increase of $35,000 in the monthly advertising budget, will double unit sales. What will the new contribution format income statement look like if these changes are adopted? PEM, Inc Contribution Income Statement