Due to erratic sales of its sole product-a high-capacity battery for laptop computers-PEM, Incorporated, has been experiencing financial difliculy for some time. The company's contribution format income statement for the most recent month is given below: Pequired: 1. Compute the company's CM rotio and its break-even point in unit sales and dollat sales. 2. The pretident believes that a $16,000 increase in the monthly advertising budget, combined with an intensified effort by the sales star, will increase unit sales and the total sales by $80.000 per month. If the preskdent is right. what will be the increase (decreasef in the compary's monthly net operating income? 3. Pefer to the original data. The sales manager is convinced that a tosi reduction in the selling price, combined with an increase of 560,000 in the monthly advertising budget, will double unit sales. If the sales manager is right, what will be the revised net operating income fosst? 4. Fieter to the original data. The Marketing Department thinks that a fancy new package for the laptop computer battery would grow walos. The new package would increase pockaging costs by 75 cents per unit. Assuming no other changes, how many units would have to be sold each month to atrain a taiget profit of $9.7507 5. Refer to the oriainal data. By autamating. the company could reduce variable expenses by $3 per unt. Howevec, fued expenses would increase by \$12.000 each month. a. Compute the new CM ratia and the new beeak-even point in unit saies and doliar sales. b. Assume that the company expects to sell 26.000 units next month. Prepare two contribution formst income statements, one assuiming that operations are not nutomsied and one assuming that they are. (Shaw data on a per unit and perrentoge busis. at weil as in total for esch alternative.) c. Would you recominend that the company autamate its operations /Asssuming that the compary exbects to sell 26,000 unitsp? Complete this queation by entering your answers in thin tabs below. Complete this question by entering your answers in the tabs below. Compute the company's CM ratio and its break-even point in unit sales and dollar sales. (Do not round intermediate calculations.) went as in tofal, tor each altemative.) c. Would you recommend that the company automate its operations (Assuming that the company expects to sell 26,000 unit) Complete this question by entering your answers in the tabs below. The president believes that a $16,000 increase in the monthly advertising budget, combined with an intensified effort by the sales staft, will increase unit sales and the total sales by 580,000 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.) assuming that operations are not automated and one assuming that they are. (Show data on a per unit and percentage basis, 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. 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.) assuming that operations are not automated and one assuming that they are. (Show data on a per unit and percentage basis, an well as in total, for each alternative.) c. Would you recommend that the company automate its operations (Assuming that the company expects to seil 26.000 units)? Complete this question by entering your answers in the tabs below. 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.) 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. Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit, Howevec, 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. 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.) Complete this question by entering your answers in the tabs below. 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. Would you recommend that the company automate its operations (Assuming that the company expects to sell 26,000 units)
