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 (13,500 units * $20 per unit) Variable expenses Contribution margin Fixed expenses Net operating loss $ 270,000 135,000 135,000 150,000 $ (15,000) 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 $6,800 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an $85,000 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 $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)? 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 $0.60 per unit. Assuming no other changes, how many units would have to be sold each month to attain a target profit of $4,900? 5. Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses 20.07 expenses by $3 pe 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 20,500 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 20,500)? Complete this question by entering your answers in the tabs below. Req1 Reg 2 Reg 3 Reg 4 Reg SA Reg 5B Refer to the original data. The sales manager is convinced that a 10% reduction in the se increase of $34,000 in the monthly advertising budget, will double unit sales. If the sales revised net operating income (loss)? (Losses should be entered as a negative value.) Revised net operating income (loss) increase packaging costs by 50 60 Assuming no other changes, how many would have to be so each month to target proof $4.9007 5. Refer to the original data by automating the company could reduce variable expenses by 3 perunt. However, fed expenses would increase by $53.000 each month a compute the new CM ratio and the now break even point in unit sales and dollar . Assume that the company expects to sell 20.500 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 per unit and percentage basis, as well as in total, for each alternative) Would you recommend that the company automate its operations Assuming that the company expects to sell 20.500) Complete this question by entering your answers in the tabs below. Reg Reg 2 Reg 3 Reg 4 Reg 5 Red SA Refer to the original data. By automating, the company could reduce variable expenses expenses would increase by $53,000 each month. Compute the new CM ratio and the new dollar sales. (Do not round intermediate calculations. Round "CM ratio" to the nearest whi entered as "23") and other answers to the nearest whole number.) % CM ratio Break-even point in unit sales Break-even point in dollar sales 11 Prev 1 of 1 Next graded one-timer HW a c. Would you recommend that the company automate its operations (Assuming that the company expects to sell 20.500) Complete this question by entering your answers in the tabs below. Reg SA Reg SC Reg 3 Reg 4 Reg 58 Reg2 Reg1 Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses we by $53,000 each month. Assume that the company expects to sell 20,500 units next month. Prepare two contribution format incon statements, one assuming that operations are not automated and one assuming that they are. (Show data on a per unit and perce as well as in total, for each alternative.) (Do not round your intermediate calculations. Round your percentage answers to the near number.) PEM, Inc Contribution Income Statement Not Automated Automated Per Unit Total % Per Unit Total % %6 0 % 0 0 $ Sales Variable expenses Contribution margin Fixed expenses Jet operating income 0 0 % os S 0 $ 0 Prev 1 of 1 Next