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Due to erratic sales of its sole product-a high-capacity battery for laptop computers-PEM, Inc., has been experiencing financial difficulty for some time. The company's contribution

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Due to erratic sales of its sole product-a high-capacity battery for laptop computers-PEM, Inc., has been experiencing financial difficulty for some time. The company's contribution format income statement for the most recent month is given below: Sales (19,5ee units x $30 per unit) Variable expenses Contribution margin Fixed expenses Net operating loss $ 585,000 409, see 175,500 180, eee $ (4,500) Required: 1. Compute the company's CM ratio and its break-even point in unit sales and dollar sales 2. The president believes that a $16,000 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will increase unit sales and the total sales by $80,000 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 $60,000 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 75 cents per unit. Assuming no other changes, how many units would ONEA 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 75 cents per unit. Assuming no other changes, how many units would have to be sold each month to attain a target profit of $9750? 5. Refer to the original data By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $72,000 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 26,000 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 26,000 units)? 9 Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reqs Req4 Reg SA Reg 58 Req 5C Compute the company's CM ratio and its break-even point in unit sales and dollar sales. (Do not round intermediate calculations.) CM ratio 5 well as in total, for each alternative) c Would you recommend that the company automate its operations (Assuming that the company expects to sell 26.000 units Complete this question by entering your answers in the tabs below. 05:33 Req 5C eq 1 Reg 2 Req3 Reg 4 Req SA Req 58 Compute the company's CM ratio and its break-even point in unit sales and dollar sales. (Do not round intermediate calculations.) % CM ratio Break-even point in unit sales Break-even point in dollar sales FON Req2 > Chec well as in total, for each alternative.) c. Would you recommend that the company automate its operations (Assuming that the company expects to sell 26,000 uni Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Req3 Reg 4 Reg SA Reg 5B Reg 5C The president believes that a $16,000 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will increase unit sales and the total sales by $80,000 per month. If the president is right, what will be the increase (decrease) in the company's monthly net operating income? (Do not round intermediate calculations.) by 04.04:39 Reg 1 Reg 2 Reg 3 Reg 4 Reg 5A Reg 58 Req 5C eBook Print Refer to the original data. The sales manager is convinced that a 10% reduction in the selling price, combined with an increase of $60,000 in the monthly advertising budget, will double unit sales. If the sales manager is right, what will be the revised net operating income (loss)? (Losses should be entered as a negative value.) Revised not operating income (loss) tences Complete this question by entering your answers in the tabs below. 1 points Req1 04:04:27 Reg 2 Reg 3 Rag 4 Reg SA Reg 58 Reqse book 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 75 cents per unit. Assuming no other changes, how many units would have to be sold each month to attain a target profit of $9.750? (Do not round intermediate calculations Lint sales to attain target profit References Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Req3 Req SA Req 50 Reg SC Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $72,000 each month Compute the new CM ratio and the new break-even point in unit sales and dollar sales. CM ratio Break-even point in unit sales Break-even point in dollar sales 5 Reg 1 Reg 2 Reg 3 Reg 4 Reg SA Reg 58 Reg SC Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $72,000 each month. Assume that the company expects to sell 26,000 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.) Show less 000340 PEM, Inc Contribution Income Statement Not Automated Total Per Unit 58 Book Automated Total Per Unit % Pa erences 05 0 0 % OS 0 0 % $ 0 $ 0

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