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 (13,300 units x 20 per unit) Variable expenses Contribution margin Fixed expenses Net operating loss 266, 159.500 106.488 118,400 S (12.eee) 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 $6,700 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an $81,000 increase in monthly sales. 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 $33.000 in the monthly advertising budget will double unit sales. If the sales manager is right, what will be the revised net operating 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 cach month to attain a target profit of $4,700? 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 20,300 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 20,30077 Complete this question by entering your answers in the tabs below. Re4 1 Reg 2 Reg 3 Reg 4 Reg SA Req SB Rea SC Compute the company's CM ratio and its break-even point in unit sales and dollar sales. (Do not round intermediate calculations. Round "CM ration to the nearest whole percentage (i.c. 0.234 should be entered as "23"). CM ratio Break-ovon point in unit salos Broak ovon point in dollar caloc Roi Reg 2 Req3 Reg 4 RAG SA RAG SE ROG SC The president believes that a $6,700 Increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an $81,000 increase in monthly sales. 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 Complete this question by entering your answers in the tabs below. . Rea 1 Reg 2 Rog 3 3 Reg 4 ROG SA Rog 54 Reg 5c Refer to the original data. The sales manager is convinced that a 10% reduction in the selling price, combined with an increase of $33,000 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 (la) Rugi R. Rag ROG SA Rerer to the original data. The Marketing Department thinks that a rancy 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 34,700? (Do not round intermediate calculations. Round final answer to the nearest whole unit) Show Unit aloo to attain target pront Regs Red 50 Refer to the original data. By automating, the company could reduce variable expenses by 33 per unit. However, fixed dollar sales. (Do not round intermediate calculations. Round "CM ration to the nearest whole percentage cie.. 0.234 should be entered as "23") and other answers to the nearest whole number.) Cratie Bruuk-uvun point in unit walue Rreak even point in dieser ID Real Reg 2 Reg SA Red 50 Rea SC Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, ixed expenses would increase by $51,000 each month. Assume that the company expect to sell 20.300 units next month. Prepare two contribution format income as well as in total, for each alternative.) (Do not round your intermediate calculations. Round your percentage answers to the nearest whole number) Show less PEM, Inc. Contribution Income Statement Net Automated Automated Total Per unit Total Par unit 96 90 R> R3 RAG ROG SR Refer to the original data, y automating, the company could reduce variable expenses by sa per unit. However nxed expenses would increase by $$1,000 cech month. Would you recommend that the company automate its operations (Acuming that the company expects to coll 20, 2007 OYes ON