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 (12,600 units at $40 per unit)	$	504,000
Variable expenses		302,400
Contribution margin		201,600
Fixed expenses		225,600
Net operating loss	$	(24,000)

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 $6,200 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in a $86,000 increase in monthly sales. If the sales manager is right, what will the revised net operating income or loss? (Use the incremental approach in preparing your answer.) (Omit the "$" sign in your response.)

(Click to select)Net operating lossNet operating income is

$

3.

Refer to the original data. The president is convinced that a 10% reduction in the selling price, combined with an increase of $31,000 in the monthly advertising budget, will double unit sales. What will the new contribution format income statement look like if these changes are adopted? (Input all amounts as positive values except losses which should be indicated by minus sign. Omit the "$" sign in your response.)

Contribution Income Statement
(Click to select)Fixed expensesContribution marginVariable expensesSalesNet operating income (loss)	$
(Click to select)Contribution marginNet operating income (loss)Variable expensesSalesFixed expenses
(Click to select)SalesNet operating income (loss)Fixed expensesContribution marginVariable expenses
(Click to select)Fixed expensesContribution marginNet operating income (loss)Variable expensesSales
(Click to select)Contribution marginNet operating income (loss)Fixed expensesVariable expensesSales	$

4.	Refer to the original data. The company