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. 2. The sales manager feels that an $8,000 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in a $70,000 increase in monthly sales. If the sales Chapter 8 manager is right, what will be the effect on the company's monthly net operating income or losys company make these changes? 4efer to the original data. The company's advertising agency thinks that a new package would hegh sales. The new package being proposed would increase packaging costs by $0.60 per unit. Assumin other changes, how many units would have to be sold each month to earn a profit of $4,500 ? 5. Refer to the original data. By automating, the company could slash its variable expenses in half, However, fixed costs would increase by $118,000 per month. a. Compute the new CM ratio and the new break-even point in both units and dollars. b. Assume that the company expects to sell 20,000 units next month. Prepare two contribution form income statements: one assuming that operations are not automated, and one assuming that bex c. Would you recommend that the company automate its operations? Explain. d. What is the point of indifference between the two options