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Due to erratic sales of its sole product-a high-capacity battery for laptop computers-PEM. Incorporated, 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. Incorporated, has been experiencing financial difficulty for some time. The company's contribution format income statement for the most recent month is given below: Required: 1. Compute the company's CM ratio and its breakeven point in unit soles and dollar sales 2. The president believes that a $6,000 increase in the monthly advertising budget, combined with an intensified effort by the sales staft, will increase unit sales and the total sales by $83,000 per month. If the president is night, what will be the increase (decrease) in the compary's monthly ret 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 $35,000 in the monthly advertising budget wit double unit sales. If the sales manager is right what will be the revised net operating income (loss)? 4. Refer to the onginal 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 $070 per unit Assuming no other changes, how many units would have to be sold each month to attain a target profit of $4.800 ? 5 Refer to the origmal dala. By automating the conipany could redace variable expenses by $3 per unit. However, fixed expenses would increase by $50,000 each month 5. Compute the nev CM ratio and the new breakeven point in unit soles and dollar sales. b. Assume that the company expects to sell 20700 unuts next month. Frepare two contribution format income statemeats, one assuming that operations are not automatedand 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 cornpany outomate its operations (Assuming that the company expects to sell 20700 units)

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