Memofax, Inc. produces memory enhancement software for computers. 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 (19,000 units) Less: Variable expenses Contribution margin Less: Fixed expenses Net operating loss Required: 1. Compute the company's CM ratio and its break-even point in both units and dollars. (Do not round intermediate calculations. Round your "Break-even point in units" answer up to nearest whole number.) Contribution margin ratio Break-even point in units Break-even point in dollars $760,000 570,000 190,000 200,000 $ (10,000) Increase in monthly net operating income $ 25 % 20,000 800,000 2. The sales manager feels that an $22,000 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in a $140,000 increase in monthly sales. If the sales manager is right, what will be the effect on the company's monthly net operating income or loss? (Use the incremental approach in preparing your answer.) $ 13,000

Memofax, Inc produces memory enhancement software for computers. 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: Required: 1. Compute the company's CM ratio and its break-even point in both units and dollars. (Do not round intermediate calculations. Round your "Break-even point in units" onswer up to nearest whole number.) 2. The sales manager feels that an $22.000 increase in the monthly advertising budget, combined with an intensified ellort by the sales staft, will result in a $140,000 increase in monthly sales. If the sales manager is right, what will be the effect on the company's monthly net operating income or loss? (Use the incremental approach in preparing your answer.) 3. Reler to the original data. The president is convinced that a 9$ teduction in the selling price, combined with an increase of $41000 in the monthly advertising budget will double unit sales. Should the company make these changes? Yes: No 4. Refer to the original data. The company's advertising agency thinks that a new package would help sales. The new package being proposed would increase packaging costs by $0.5 per unit Assuming no other changes, how many units would have to be sald each month to earri a profit of $5,900 ? (Do not round intermedinte colculations. Round your onswer up to nearest whole number.) 5. Refer to the original data. By automating, the company could slash its variable expenses in half. However, fixed costs would increase by $87,500 per month, o. Compute the new CM ratio and the new breakeven point in both units and dollars. (Do not round intermediote calculations. Round your "Contribution morgin ratio" answer to 2 decimal places, Round your "Break-even point' anawern up to nearest whole number.) b. Assume that the company expects to sell 25,000 units next month. Prepare two contribution format income statements: one assuming that operations are not automated, and one assuming that they are. (Do not round intermediote calculotions. Round "Per Unit" and "Percentoge" to 2 decimal places.) c. This part of the question is not part of your Connect assignment. d. What is the point of indifference between the two options? (Do not round intermediate calculotions. Round your onswer up to neorest whole number.)