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 (15,000 units) Less: Variable expenses Contribution margin Less: Fixed expenses Net operating loss $300,000 180,000 120,000 130,000 $(10,000) 790 Total point 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 000 40 16,250 $325,000 2. The sales manager feels that an $14,000 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in a $100,000 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.) Increase in monthly not operating income $ 26,000 ded 5. Refer to the original data. By automating, the company could slash its variable expenses in half. However, fixed costs would increase by $40.800 per month. a. Compute the new CM ratio and the new break-even point in both units and dollars. (Do not round intermediate calculations. Round your "Contribution margin ratio" answer to 2 decimal places. Round your "Break-even point" answers up to nearest whole number.) 300 Contribution margin ratio Break-even point in units Break-even point in dollars $ 12,200 244,000 b. Assume that the company expects to sell 20.000 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 intermediate calculations. Round "Per Unit" and "Percentage" to 2 decimal places.) Comparative Income Statements Not Automated Automated Total Sales Less Vanable expenses $400,000 Per Unit $ 20.00 Total Contribution margin Less Fixed expenses Net operating income 0000 240,000 160,000 $ 8.00 130,000 12.00 Percentage (%) 100.00 $400,000 $ 20 000 60.00 120,000 6.00 40.00 Per Unit Percentage (%) 100 00 30 00 280,000 S 14.00 70.00 170,800 0 $ 30,000 $ 109,200 b. Assume that the company expects to sell 20,000 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 intermediate calculations, Round "Per Unit" and "Percentage" to 2 decimal places.) Comparative Income Statements Not Automated Automated Total Per Unit Percentage (%) Total Per Unit Percentage 1%) Sales $ 400,000 $ 20.00 100.00 $ 400,000 $ 20.00 100.00 Less Variable expenses 240,000 12.00 60.00 120,000 6.00 30 00 Contribution margin 160,000 $ 8.00 40.00 280,000 $ 14.00 70.00 Less Fixed expenses Net operating income $ 130,000 30,000 $ 170,800 109,200 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 calculations. Round your answer up to nearest whole number.) The point of indifference between the two options units Help Save &