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 (12,800 units at $40 per unit)	$	512,000
Variable expenses		256,000
Contribution margin		256,000
Fixed expenses		286,000
Net operating loss	$	(30,000)

Required:
1.	Compute the company's CM ratio and its break-even point in both units and dollars. (Omit the "%" and "$" signs in your response.)

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

2.

The sales manager feels that an $6,800 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in a $82,000 increase in monthly sales. If the sales manager is right, what will the revised net operating income or loss? (Use the incremental approach in preparing your answer.) (Omit the "$" sign in your response.)

(Click to select) Net operating income Net operating loss is

$

3.

Refer to the original data. The president is convinced that a 10% reduction in the selling price, combined with an increase of $39,000 in the monthly advertising budget, will double unit sales. What will the new contribution format income statement look like if these changes are adopted? (Input all amounts as positive values except losses which should be indicated by minus sign. Omit the "$" sign in your response.)

Contribution Income Statement
(Click to select) Net operating income (loss) Variable expenses Contribution margin Sales Fixed expenses	$
(Click to select) Fixed expenses Contribution margin Sales Net operating income (loss) Variable expenses
(Click to select) Net operating income (loss) Variable expenses Fixed expenses Contribution margin Sales
(Click to select) Variable expenses Sales Fixed expenses Net operating income (loss) Contribution margin
(Click to select) Sales Fixed expenses Contribution margin Variable expenses Net operating income (loss)	$

4.	Refer to the original data. The company