Manong Co. produces a single product. Sales have been very erratic, with irregular monthly operating results. The companys income statement for the most recent month is given below:

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Sales (15, 000 units) Less variable expenses Contribution Margin Less fixed expenses Net Loss P450,000 315,000 135,000 150,000 P(15, 000) REQUIRED: A. The sales manager feels that a P20, 000 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in a P100,000 increase in monthly sales. If the sales staff, will result in at the effect on the company's monthly net income or loss? B. The president is convinced that a 10% reduction in the selling price, combined with a P50,000 increase in the monthly advertising budget, will cause units sales to double. What will the new income statement look like if these changes are adopted? C. Refer to the original data. By automating certain operation, the company could slash its variable expenses to half. However, fixed costs would increase to P250,000 per month. a. Compute the new CM ratio and the new break-even point in both units and pesos. b. Assume that the company expects to sell 20,000 units next month. Prepare two income statements, one assuming that operations are not automated and one showing that they are. c. Would you recommend that the company automate its operations? Explain