Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Due to erratic sales of its sole product-a high-capacity battery for laptop computersPEM, Inc, has been experiencing financial difficulty for some time. The company's contribution
Due to erratic sales of its sole product-a high-capacity battery for laptop computersPEM, 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 (13,000 units $20 per unit) Variable expenses Contribution margin Fixed expenses Net operating loss $ 260,000 130,000 130,000 145,000 $ (15,000) 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 (1.e., 0.234 should be entered as "23"). CM ratio % Break-even point in unit sales Break-even point in dollar sales The president believes that a $6,500 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will increase unit sales and the total sales by $88,000 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 Refer to the original data. The sales manager is convinced that a 10% reduction in the selling price, combined with an increase of $34,000 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 net operating income (loss)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started