Hello,

I need help with parts of this problem. Parts i need help with are in BOLD

Thank you

Due to erratic sales of its sole producta high-capacity battery for laptop computersPEM, 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 $40 per unit)$540,000Variable expenses324,000Contribution margin216,000Fixed expenses240,000Net operating loss$(24,000)

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 $6,100 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an $82,000 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 $31,000 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 0.80 cents 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 original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $55,000 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 20,800 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?

Compute the company's CM ratio and its break-even point in unit sales and dollar sales.

Req 1

CM ratio 40%

Break-even point in units 15,000

Break-even point in dollars $600,000

Req. 2

Increases by $26,700

Req 3

Revised net operating income (loss) $53,000

Req 4

Sales units ????

Req 5A

CM ratio 48%

Break-even point in units ???

Break-even point in dollars ???

Req 5B

Need automated Variable expenses