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PEM, Incorporated, is experiencing financial difficulty due to erratic sales of its only product, a high - capacity battery for laptop computers. The company s
PEM, Incorporated, is experiencing financial difficulty due to erratic sales of its only product, a highcapacity battery for laptop computers. The companys contribution format income statement for the most recent month is given below: Sales units times $ per unit $ Variable expenses Contribution margin Fixed expenses Net operating loss $ Required: Compute the companys CM ratio and its breakeven point in unit sales and dollar sales. The president believes a $ increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will increase unit sales and the total sales by $ per month. If the president is right, what will be the increase decrease in the companys monthly net operating income? Refer to the original data. The sales manager is convinced that a reduction in the selling price, combined with an increase of $ 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 cents per unit. Assuming no other changes, how many units would have to be sold each month to attain a target profit of $ Refer to the original data. By automating, the company could reduce variable expenses by $ per unit. However, fixed expenses would increase by $ each month. a Compute the new CM ratio and the new breakeven point in unit sales and dollar sales. b Assume the company expects to sell units next month. Prepare two contribution format income statements, one assuming operations are not automated and one assuming they are. Show data on a perunit and percentage basis, as well as in total, for each alternative. c Would you recommend that the company automate its operations Assuming that the company expects to sell units
PEM, Incorporated, is experiencing financial difficulty due to erratic sales of its only product, a highcapacity battery for laptop computers. The companys contribution format income statement for the most recent month is given below:
Sales units times $ per unit $
Variable expenses
Contribution margin
Fixed expenses
Net operating loss $
Required:
Compute the companys CM ratio and its breakeven point in unit sales and dollar sales.
The president believes a $ increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will increase unit sales and the total sales by $ per month. If the president is right, what will be the increase decrease in the companys monthly net operating income?
Refer to the original data. The sales manager is convinced that a reduction in the selling price, combined with an increase of $ 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 cents per unit. Assuming no other changes, how many units would have to be sold each month to attain a target profit of $
Refer to the original data. By automating, the company could reduce variable expenses by $ per unit. However, fixed expenses would increase by $ each month.
a Compute the new CM ratio and the new breakeven point in unit sales and dollar sales.
b Assume the company expects to sell units next month. Prepare two contribution format income statements, one assuming operations are not automated and one assuming they are. Show data on a perunit and percentage basis, as well as in total, for each alternative.
c Would you recommend that the company automate its operations Assuming that the company expects to sell units
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