Due to erratic sales of its sole producta high-capacity battery for laptop computersPEM, Inc., has been experiencing financial difficulty for some time. The companys contribution format income statement for the most recent month is given below:

Sales (12,600 units $20 per unit)	$	252,000
Variable expenses		151,200
Contribution margin		100,800
Fixed expenses		112,800
Net operating loss	$	(12,000	)

Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $53,000 each month.

a. Compute the new CM ratio and the new break-even point in unit sales and dollar sales.