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 (13,000 units at $20 per unit) $ 260,000 Variable expenses 156,000 Contribution margin 104,000 Fixed expenses 116,000 Net operating loss $ (12,000) Required: 1. Compute the company's CM ratio and its break-even point in both units and dollars. CM ratio % Break-even point in units Break-even point in dollars $ 2. The sales manager feels that an $7,800 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in a $67,000 increase in monthly sales. If the sales manager is right, what will be the effect on the company