O O Considering the fact that the company met its $750,000 sales budget for the month, the presi- dent is shocked at the results shown on your income statement in (1) above. Prepare a brief memo for the president explaining why both the operating results and the break-even point in dollar sales are different from what was budgeted. PROBLEM 5-22 Basics of CVP Analysis; Cost Structure L05-1, LOS-3, LO5-4, LOS-5, LOS-6) Due to erratic sales of its sole product high-capacity battery for laptop computers.PEM, Inc. has been experiencing difficulty for some time. The company's contribution format income state- ment for the most recent month is given below: Sales (19,500 units X $30 per unit) Variable expenses Contribution margin Fixed expenses Net operating loss $585,000 409,500 175,500 180.000 $ 4.500 Required: Compute the company Mrati and is break-even point in the unit sales and dollar sales The president believes that a $16.00 increase in the monthly advertising budget, combined with an intensified fruit by the sales it will result in an $80,000 increase in monthly Sales. If the presidentin nghi. What will be the effect on the company's monthly net operating income to the incremental approach in preparing your answer.) Reithain : The de manager vinced that a 10st reduction in the selling price, bied with an internet of 5600 in the monthly advertising budget will double unit sales What will N O Matement look like if these changes and adopted Refer R I M thanks for the Santo NR S EN TO Wald increase picking costs INI units woul d be sold each THA UOLIS SULUI memo for the president explaining why both the operating results and the break-even point in dollar sales are different from what was budgeted. PROBLEM 5-22 Basies of CVP Analyule; cout Structure (L05-1, L05-3, LOS-4, LOS-S, LOS-6) Due to erratic sales of its sole product high-capacity battery for laptop computers_PEM, Inc., has been experiencing difficulty for some time. The company's contribution format income state- ment for the most recent month is given below: Sales (19,500 units X $30 per unit). Variable expenses.. Contribution margin Fixed expenses Net operating loss $585,000 409,500 175,500 180,000 $ 14,500) Required: 1. Compute the company's CM ratio and its break-even point in both unit sales and dollar sales 2. The president believes that a S16,000 increase in the monthly advertising budget, combined with an intensified effort by the sales stall, will result in an $80,000 increase in monthly sales. If the president is right, what will be the effect on the company's monthly net operating income or ons? Use the incremental approach in preparing your answer.) Refer to the original data. The sales manager is convinced that a 10% reduction in the selling price, combined with an increase of $60,000 in the monthly advertising budget. will double unit sales. What will the new contribution format income statement look like if these changes are adopted Refer to the original data. The Marketing Department thinks that fancy new package for the laptop computer battery would help sales. The new package would increase packaging his by 75 cents per unit. Assuming no other changes, how many units would have to be sold each month to earn a profit of $9.750 Aa 1) ^ (1) enovo