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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 contribution
PEM, Incorporated, is experiencing financial difficulty due to erratic sales of its only product, a highcapacity battery for laptop
computers. The company's contribution format income statement for the most recent month is given below:
Requlred:
Compute the company's CM ratio and its breakeven point in unit sales and dollar sales.
The president believes $ incresse in the monthly odvertising budget, combined with an intensified effort by the sales staff,
will incresse unit sales and the total soles by $ per month. If the president is right, whst will be the incresse decresse in the
compony's monthly net opersting income?
Refer to the original dato. The sales mansger is convinced that a reduction in the selling price, combined with an increase of
$ in the monthly odvertising budget, will double unit sales. If the sales manager is right, what will be the revised net
operating income loss
Refer to the original dato. The Marketing Department thinks that o foncy new pocksge for the laptop computer bottery would grow
sales. The new pockage would incresse variable costs by $ per unit. Assuming no other changes, how many units would have
to be sold each month to attain o target profit of $
Refer to the original dats. By outomsting, the compony could reduce variable expenses by $ per unit. However, fixed expenses
would incresse by $ each month.
a Compute the new CM ratio and the new breakeven point in unit sales and dollar sales.
b Assume the compony expects to sell units next month. Prepare two contribution format income statements, one
ossuming operstions are not sutomated and one assuming they are. Show dats on a perunit and percentoge bosis, as well as in
totel, for each alternative.
c Would you recommend the company outomate its operations Assuming that the company expects to sell units
Complete this question by entering your answers in the tabs below.
Refer to the original data. By automating, the company could reduce variable expenses by $ per unit. However, fixed expenses
would increase by $ each month. 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.
Note: Do not round your intermediate calculations. Round your percentage answers to the nearest whole number.
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