Question
Hello: I need the bolded info answered for question 1 and 2 please. Due to erratic sales of its sole producta high-capacity battery for laptop
Hello: I need the bolded info answered for question 1 and 2 please.
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 (12,700 units $20 per unit) $ 254,000
Variable expenses 152,400
Contribution margin 101,600
Fixed expenses 113,600
Net operating loss $ (12,000 )
Question 1: Refer to the original data. The sales manager is convinced that a 10% reduction in the selling price, combined with an increase of $38,000 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.)
Revised net operating income (loss) =
Question 2: Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $56,000 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.)
a. CM ratio = %
b. Break-even point in unit sales =
c. Break-even point in dollar sales =
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