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 at S40 per unit) S760,000 Less: Variable expenses 570,000 Contribution margin 190,000 Less: Fixed expenses 200,000 Net operating loss S(10,000) Required: 1. Compute the company's CM ratio and its break-even point in both units and dollars. Contribution margin ratio Break-even point in units Break-even point in dollars 96 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.) 3. Refer to the original data. The president is convinced that a 10% reduction in the selling price combined with an increase of $41,000 in the monthly advertising budget, will double unit sales. What will the new contribution format income statement look like if these changes are adopted? Sales