Managerial accounting - Please see exercise attachment

PART 1 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 (12,800 units $40 per unit) Variable expenses Contribution margin Fixed expenses Net operating loss 512,00 0 256,00 0 256,00 0 286,00 0 (30,00 $ ) 0 $ 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 $7,000 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an $81,000 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 $32,000 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 0.70 cents per unit. Assuming no other changes, how many units would have to be sold each month to attain a target profit of $4,200? 5. Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $50,000 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 20,300 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? Complete this question by entering your answers in the tabs below. Req 1 : Compute the company's CM ratio and its break-even point in unit sales and dollar CM ratio Break-even point in units Break-even point in dollars ?? ??? % ??? Req 2 : The president believes that a $7,000 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an $81,000 increase in monthly sales. If the president is right, what will be the increase (decrease) in the company's monthly net operating income? ??? By ??? Req 3 : Refer to the original data. The sales manager is convinced that a 10% reduction in the selling price, combined with an increase of $32,000 in the monthly advertising budget, will double unit sales. If the sales manager is right, what will be the revised net operating income (loss)? Revised net operating income (loss) ???? Req 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 70 cents per unit. Assuming no other changes, how many units would have to be sold each month to attain a target profit of $4,200? (Do not round intermediate calculations. Round final answer to the nearest whole unit.) Sales Units ????????? ? Req 5 : Compute the new CM ratio and the new break-even point in unit sales and dollar sales. (Round "CM ratio" to the nearest whole percent and other answers to the nearest whole number.) CM ratio Break-even point in units Break-even point in dollars ?? ??? % ??? Req 5B : Assume that the company expects to sell 20,300 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.) (Round your percentage answers to the nearest whole number.) Req 5C : PART 2 The Shirt Works sells a large variety of tee shirts and sweatshirts. Steve Hooper, the owner, is thinking of expanding his sales by hiring high school students, on a commission basis, to sell sweatshirts bearing the name and mascot of the local high school. These sweatshirts would have to be ordered from the manufacturer six weeks in advance, and they could not be returned because of the unique printing required. The sweatshirts would cost Hooper $24.00 each with a minimum order of 360 sweatshirts. Any additional sweatshirts would have to be ordered in increments of 50. Since Hooper's plan would not require any additional facilities, the only costs associated with the project would be the costs of the sweatshirts and the costs of the sales commissions. The selling price of the sweatshirts would be $48.00 each. Hooper would pay the students a commission of $4.00 for each shirt sold. Required: 1. What level of unit sales and dollar sales is needed to attain a target profit of $13,000? 2. Assume that Hooper places an initial order for 360 sweatshirts. What is his break-even point in unit sales and dollar sales? (Round your intermediate calculations and final answers to the nearest whole number.) PART 3 Jay Corporation has provided data from a two-year period to aid in planning. The Controller has asked you to prepare a contribution format income statement. Use the information included in the Excel Simulation and the Excel functions described below to complete the task. Cell Reference: Allows you to refer to data from another cell in the worksheet. From the Excel Simulation below, if in a blank cell, \"=B4\" was entered, the formula would output the result from cell B4, or 17,000 in this example. Basic Math functions: Allows you to use the basic math symbols to perform mathematical functions. You can use the following keys: + (plus sign to add), - (minus sign to subtract), * (asterisk sign to multiply), and / (forward slash to divide). From the Excel Simulation below, if in a blank cell \"=B19+B20\" was entered, the formula would add the values from those cells and output the result, or 183,800 in this example. If using the other math symbols the result would output an appropriate answer for its function. SUM function: Allows you to refer to multiple cells and adds all the values. You can add individual cell references or ranges to utilize this function. From the Excel Simulation below, if in a blank cell \"=SUM(C18,C19,C20)\" was entered, the formula would output the result of adding those three separate cells, or 47,300 in this example. Similarly, if in a blank cell \"=SUM(C18:C20)\" was entered, the formula would output the same result of adding those cells, except they are expressed as a range in the formula, and the result would be 47,300 in this example. ALL ANSWERS MUST BE ENTERED AS A FORMULA FOR THE EXCEL SHEET PART 4 Haas Company manufactures and sells one product. The following information pertains to each of the company's first three years of operations: Variable costs per unit: Manufacturing: Direct materials $ 24 Direct labor $ 16 Variable manufacturing overhead $ 7 Variable selling and administrative $ 2 Fixed costs per year: $120,00 Fixed manufacturing overhead 0 Fixed selling and administrative $ expenses 60,000 During its first year of operations, Haas produced 60,000 units and sold 60,000 units. During its second year of operations, it produced 75,000 units and sold 50,000 units. In its third year, Haas produced 40,000 units and sold 65,000 units. The selling price of the company's product is $52 per unit. Required: 1. Compute the company's break-even point in unit sales. 2. Assume the company uses variable costing: a. Compute the unit product cost for Year 1, Year 2, and Year 3. b. Prepare an income statement for Year 1, Year 2, and Year 3. 3. Assume the company uses absorption costing: a. Compute the unit product cost for Year 1, Year 2, and Year 3. b. Prepare an income statement for Year 1, Year 2, and Year 3. Complete this question by entering your answers in the tabs below. Req 1 Req 2B : Prepare an income statement for Year 1, Year 2, and Year 3. Assume the company uses variable costing. Req 3A: Compute the unit product cost for Year 1, Year 2, and Year 3. Assume the company uses absorption costing. (Round your intermediate calculations and final answers to 2 decimal places.) Req 3B : Prepare an income statement for Year 1, Year 2, and Year 3. Assume the company uses absorption costing