Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Please Answer all questions with steps Due to erratio sales of its sole product-a higheapacity battery for laptop computers-PEM, Tho., has been experiencing fintancial difficulty
Please Answer all questions with steps
Due to erratio sales of its sole product-a higheapacity battery for laptop computers-PEM, Tho., has been experiencing fintancial difficulty for some time. 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 unit sales and dollar sales. 2. The president believes that a $16,000 increase in the monthly advertising budget, combined with an interisified effort by the sales staff. will increase unit sales and the total sales by $80.000 per month. If the president is right, what will be the increase (decrense) in the company's mointhly net operating income? 3. Refer to the original data. The sales manager is convinced that a 10% reduction in thie selling price, combined with an increase of $60.000 in the monthly advertising budget, will double unit sales. If the sales manager is right, what will be the revised net operating income (loss)? 4. Refer to the original data. The Marketing Departmeit thinks that a fancy new piekage for the laptop computer battery wotild grow sales. The new package would increase packaging costs by 75 ecnits per unit. Assuming no other changes, how many units would have to be sold cach month to attain a target profit of $9.750 ? 5. Refer to the original data. By automating, the company could reduce yariable expenises by $3 per unit. However, fixed expenses would increase by $72.000 each month. a. Compute the new CM ratio and the new breakeven point in unit siles and dollar sales. b. Assume that the company expects to sell 26.000 units next month. Prepare two contribution format income statements, one assuming that operations are not automated and one assuming that they are. (Show data on a per unit and percentage basis, as well as in total, for each alternative.) c. Would you recommend that the comipany automate its operations? Explain Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started