I need a Requirement 5:

Due to erratic sales of its sole producta high-capacity battery for laptop computersPEM, Inc., has been experiencing difficulty for some time. The company's contribution format income statement for the most recent month is given below:

Sales (13,400 units at $40 per unit)

$ 536,000

Variable expenses

268,000

Contribution margin

268,000

Fixed expenses

298,000

Net operating loss

$

(30,000)

Requirement 1:

Compute the company's CM ratio and its break-even point in both units and dollars.

CM ratio	50%
Break-even point in units	14900 units
Break-even point in dollars	569000 $

Requirement 2:

The president believes that a $6,700 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an $83,000 increase in monthly sales. If the president is right, what will be the effect on the companys monthly net operating income or loss? (Use the incremental approach in preparing your answer.)

increase $34800

Requirement 3:

Refer to the original data. The sales manager is convinced that a 10% reduction in the selling price, combined with an increase of $36,000 in the monthly advertising budget, will double unit sales. What will the new contribution format income statement look like if these changes are adopted?

Sales	$ 964800
Variable expenses	536000
Contribution margin	428800
Fixed expenses	334000
Net operating income	$ 94800

Requirement 4:

Refer to the original data. The Marketing Department thinks that a fancy new package for the laptop computer battery would help sales. The new package would increase packaging costs by $0.40 cents per unit. Assuming no other changes, how many units would have to be sold each month to earn a profit of $4,600? (Do not round intermediate calculations and round your final answer to the nearest whole number.)

Sales 15439 Units

Requirement 5:

Refer to the original data. By automating, the company could reduce variable expenses in half. However, fixed expenses would increase by $50,000 each month.

(a)	Compute the new CM ratio and the new break-even point in both units and dollars.(Round units to nearest whole unit, CM ratio to nearest whole percent. Omit the "%" and "$" signs in your response.)

CM ratio	%
Break-even point in units	units
Break-even point in dollars	$

(b)	Assume that the company expects to sell 20,900 units next month. Prepare two contribution format income statements, one assuming that operations are not automated and one assuming that they are.

	Not Automated			Automated
	Total	Per Unit	%	Total	Per Unit	%
Sales (20,900 units)	$	$		$	$
Variable expenses
Contribution margin		$			$
Fixed expenses
Net operating income	$			$