Due to erratic sales of its sole product-a high-capacity battery for laptop computers-PEM, Incorporated, has been...
Fantastic news! We've Found the answer you've been seeking!
Question:
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/6656e2612adf6_0806656e260ad217.jpg)
Transcribed Image Text:
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 (13,300 units x $20 per unit) Variable expenses Contribution margin Fixed expenses Net operating loss Required: $ 266,000 133,000 133,000 148,000 $ (15,000) 1. Compute the company's CM ratio and its break-even point in unit sales and dollar sales. 2. The president believes that a $6,800 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will increase unit sales and the total sales by $82,000 per month. If the president is right, what will be the increase (decrease) in the company's monthly net operating income? 3. Refer to the original data. The sales manager is convinced that a 10% reduction in the selling price, combined with an increase of $32,000 in the monthly advertising budget, will double unit sales. If the sales manager is right, what will be the revised net operating income (loss)? 4. Refer to the original data. The Marketing Department thinks that a fancy new package for the laptop computer battery would grow sales. The new package would increase packaging costs by $0.70 per unit. Assuming no other changes, how many units would have to be sold each month to attain a target profit of $4,200? 5. Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $51,000 each month. a. Compute the new CM ratio and the new break-even point in unit sales and dollar sales. b. Assume that the company expects to sell 20,100 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.) c. Would you recommend that the company automate its operations (Assuming that the company expects to sell 20,100 units)? Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4 Req 5A Req 5B Req 5C Compute the company's CM ratio and its break-even point in unit sales and dollar sales. (Do not round intermediate calculations. Round "CM ratio" to the nearest whole percentage (i.e., 0.234 should be entered as "23"). 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 (13,300 units x $20 per unit) Variable expenses Contribution margin Fixed expenses Net operating loss Required: $ 266,000 133,000 133,000 148,000 $ (15,000) 1. Compute the company's CM ratio and its break-even point in unit sales and dollar sales. 2. The president believes that a $6,800 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will increase unit sales and the total sales by $82,000 per month. If the president is right, what will be the increase (decrease) in the company's monthly net operating income? 3. Refer to the original data. The sales manager is convinced that a 10% reduction in the selling price, combined with an increase of $32,000 in the monthly advertising budget, will double unit sales. If the sales manager is right, what will be the revised net operating income (loss)? 4. Refer to the original data. The Marketing Department thinks that a fancy new package for the laptop computer battery would grow sales. The new package would increase packaging costs by $0.70 per unit. Assuming no other changes, how many units would have to be sold each month to attain a target profit of $4,200? 5. Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $51,000 each month. a. Compute the new CM ratio and the new break-even point in unit sales and dollar sales. b. Assume that the company expects to sell 20,100 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.) c. Would you recommend that the company automate its operations (Assuming that the company expects to sell 20,100 units)? Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4 Req 5A Req 5B Req 5C Compute the company's CM ratio and its break-even point in unit sales and dollar sales. (Do not round intermediate calculations. Round "CM ratio" to the nearest whole percentage (i.e., 0.234 should be entered as "23").
Expert Answer:
Posted Date:
Students also viewed these accounting questions
-
Identifying the effect of product versus selling, general, and administrative cost on the income statement Each of the following events describes acquiring an asset that requires a year-end adjusting...
-
In order to meet competition and achieve its profit goals, NP Corporation has chosen the decentralized form of organization. Each manager of a decentralized investment center is measured on the basis...
-
Susan Jones would like her investment portfolio to be selected from a combination of three stocks Alpha, Beta, and Gamma. Let variables A, B, and G denote the percentages of the portfolio devoted to...
-
Sandhill Industries has sales of $621,010 and net operating income of $51,000. Marshalls average operating assets total $221,000. Use the Dupont model to calculate the companys return on investment....
-
Implementation of Quick Sort in C++ Write a program and use random data to sort them using Quick Sort. The pseudocode for Quick Sort is given as below: QUICKSORT(A, p,r) 1 if p
-
Rayyan enjoys the outdoors. He can bike 5 times faster than he can jog. To cover a 20 km path, Rayyan needs 2 h more if he jogs than if he bikes. What is Rayyan's average jogging speed in km/h? Round...
-
Below is an extract of payroll information for 4 employees: PAYROLL REGISTER for Week Ending 30 June C. Camellia Entitlements Ordinary Hours Worked Personal Leave Hours Overtime Hours (x1.5) Overtime...
-
2) An investment is expected to generate $150,000 of cashflow for each of the next four years. Using a 6% discount rate (interest rate) what is the present value of the cashflow? 3) You have won the...
-
Consider the current size of the U.S. debt by checking this U.S. National Debt Clock: https://www.usdebtclock.org Does the size of this U.S. debt concern you? Why or why not? Use macroeconomic...
-
Suppose currently Samsung's common stock is selling for $ 458 . The company announced that it will give $ 9. 1 8 dividend next year and it plans to grow the dividend by 9% every year. Given the...
-
On the night of July 11, 2007, Akshay Mittal, managing director of Chandpur Enterprises Limited (CEL), was staring at a sheet of numbers to decide on the raw materials requirement for the August...
-
Integrated Accounting allows for a monthly or yearly accounting cycle. (True/False)
-
Classify accounts is used to specify the account numbers needed to generate the payroll journal entries. (True/False)
-
If payroll records are being established at a time other than the beginning of a new year, quarterly and yearly earnings and withholdings must be created for each employee. (True/False)
![Mobile App Logo](https://dsd5zvtm8ll6.cloudfront.net/includes/images/mobile/finalLogo.png)
Study smarter with the SolutionInn App