Miller Company$$s contribution format income statement for the most recent month is shown below:

Total Per Unit

Sales $(24,000$ units$)$ $ $144,000$ $ $6\mathrm{.}00$

Variable expenses $86,4003\mathrm{.}60$

Contribution margin $57,600$ $ $2\mathrm{.}40$

Fixed expenses $33,600$

Net operating income $ $24,000$

Required:

$($Consider each of the four requirements independently$)$:

Assume the sales volume increases by $3,600$ units:

What is the revised net operating income?

What is the percent increase in unit sales?

Using the most recent month$$s degree of operating leverage, what is the percent increase in net operating income?

What is the revised net operating income if the selling price decreases by $$1\mathrm{.}20$ per unit and the number of units sold increases by $16\%?$

What is the revised net operating income if the selling price increases by $$1\mathrm{.}20$ per unit, fixed expenses increase by $$9,000,$ and the number of units sold decreases by $5\%?$

What is the revised net operating income if the selling price per unit increases by $20\%,$ variable expenses increase by $30$ cents per unit, and the number of units sold decreases by $8\%?$PEM, Incorporated, is experiencing financial difficulty due to erratic sales of its only product, a high$-$capacity battery for laptop

computers. The company's contribution format income statement for the most recent month is given below:

Required:

Compute the company's CM ratio and its break$-$even point in unit sales and dollar sales.

The president believes a $$6,700$ increase in the monthly advertising budget, combined with an intensified effort by the sales staff,

will increase unit sales and the total sales by $$85,000$ per month. If the president is right, what will be the increase $($decrease$)$ in the

company's monthly net operating income?

Refer to the original data. The sales manager is convinced that a $10\%$ reduction in the selling price, combined with an increase of

$$32,000$ in the monthly advertising budget, will double unit sales. If the sales manager is right, what will be the revised net

operating income $($loss$)?$

Refer to the original data. The Marketing Department thinks that a fancy new package for the laptop computer battery would grow

sales. The new package would increase variable costs by $$0\mathrm{.}40$ per unit. Assuming no other changes, how many units would have

to be sold each month to attain a target profit of $$4,300?$

Refer to the original data. By automating, the company could reduce variable expenses by $$3$ per unit. However, fixed expenses

would increase by $$58,000$ each month.

a$.$ Compute the new CM ratio and the new break$-$even point in unit sales and dollar sales.

b$.$ Assume the company expects to sell $20,800$ units next month. Prepare two contribution format income statements, one

assuming operations are not automated and one assuming they are. $($Show data on a per$-$unit and percentage basis, as well as in

total, for each alternative.$)$

c$.$ Would you recommend the company automate its operations $($Assuming that the company expects to sell $20,800$ units$)?$