Question
Hello can you solve this question please with explain. I solve some of the question but some of them were wrong. So REQ 1 WAS
Hello can you solve this question please with explain. I solve some of the question but some of them were wrong.
So REQ 1 WAS CORRECT
REQ2 was wrong
REQ 3 CORRECT
REQ 4 WRONG
REQ5 partial wrong
REQ 5B PARTIAL WRONG
rREQ 5c Correct
Due to erratic sales of its sole producta high-capacity battery for laptop computersPEM, Incorporated, has been experiencing financial difficulty for some time. The companys contribution format income statement for the most recent month is given below:
Sales (12,700 units $30 per unit) | $ 381,000 |
---|---|
Variable expenses | 190,500 |
Contribution margin | 190,500 |
Fixed expenses | 213,000 |
Net operating loss | $ (22,500) |
Required:
1. Compute the companys CM ratio and its break-even point in unit sales 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 staff, will increase unit sales and the total sales by $80,000 per month. If the president is right, what will be the increase (decrease) in the companys 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 $0.50 per unit. Assuming no other changes, how many units would have to be sold each month to attain a target profit of $4,400?
5. Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $52,000 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 20,200 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 20,200 units)?
Req 1 Reg 2 Req3 Req 4 Req 5A Req 5B Req 5C Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $52,000 each month. Assume that the company expects to sell 20,200 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.) (Do not round your intermediate calculations. Round your percentage answers to the nearest whole number.) Show less A PEM, Incorporated Contribution Income Statement % % Not Automated Per Total Unit $ 621,000 X $ 30 310,500 X 15 Sales 100 $ Automated Per Total Unit 621,000 $ 30 248,400 X 12 372,600 $ 18 100 50 40 $ 15 50 60 Variable expenses Contribution margin Fixed expenses Net operating income 310,500 213,000 97,500 265,000 107,600 $ Reg 1 Req 2 Req 3 Req 4 Req 5A Req 5B Req 50 Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $52,000 each month. Compute the new CM ratio and the new break-even point in unit sales and dollar sales. (Do not round intermediate calculations. Round "CM ratio" to the nearest whole percentage (i.e., 0.234 should be entered as "23") and other answers to the nearest whole number.) Show less A CM ratio 60 % Break-even point in unit sales 14,722 Break-even point in dollar sales 441 Req3 The president believes that a $6,000 mc case in the monthly advertising budget, combined with an intensified effort by the sales staff, will increase unit sales and the total sales by $80,000 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.) Increases by $ 420,000 XStep by Step Solution
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