Memofax, Inc., produces memory enhancement kits for fax machines. Sales have been very erratic, with some months showing a profit and some months showing a loss. The company's contribution format income statement for the most recent month is given below:

Sales (13,300 units at $20 per unit)	$	266,000
Variable expenses		133,000
Contribution margin		133,000
Fixed expenses		148,000
Net operating loss	$	(15,000)
1. Compute the company's CM ratio and its break-even point in both units and dollars. 2. The sales manager feels that an $6,100 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in a $83,000 increase in monthly sales. If the sales manager is right, what will the revised net operating income or loss? (Use the incremental approach in preparing your answer.) 3. Refer to the original data. The president is convinced that a 10% reduction in the selling price, combined with an increase of $40,000 in the monthly advertising budget, will double unit sales. What will the new contribution format income statement look like if these changes are adopted? 4. Refer to the original data. The company