Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please help for the requirements ... thank you so much in advance(: Due to erratic sales of its sole product-a high-capacity battery for laptop computers--PEM,

Please help for the requirements ... thank you so much in advance(:
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Due to erratic sales of its sole product-a high-capacity battery for laptop computers--PEM, Incorporated, has been experiencing financial difficulty for some time. The company's contribution format income statement for the most recent month is given below: Salee (13,200 units * $30 per unit) Variable expenses Contribution margin Fixed expenses Net operating loan $ 396,000 198,000 198,000 220,500 $ (22,500) 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 $6,600 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will increase unit sales and the total sales by $86,000 per month. If the president is right, what will be the increase (decrease) in the company's monthly net operating income? 3. Refer to the original data. The sales manager is convinced that a 10% reduction in the seling price, combined with an increase of $37,000 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 Department thinks that a fancy new package for the laptop computer battery would grow sales. The new package would increase packaging costs by $0.60 per unit. Assuming no other changes, how many units would have to be sold each month to attain a target profit of $4,500? 5. Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $52,000 each month 3. Compute the new CM ratio and the new break even point in unt sales and dollar sales. b. Assume that the company expects to sell 20,100 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 company automate its operations (Assuming that the company expects to sell 20,100 units)? Complete this question by entering your answers in the tabs below. Reg1 Reg 2 Reg 3 Reg 4 Reg SA Reg 58 Reg 5c Compute the company's CM ratio and its break-even point in unit sales and dollar sales. (Do not round intermediate calculations. Round "CM ratio to the nearest whole percentage (1.e., 0.234 should be entered as "23"); CM ratio Break-even point in unit sales Break-even point in dollar sales Reg 1 Req 2 Reg 3 Reg 4 Reg 5A Reg 5B Reg 5C The president believes that a $6,600 Increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will increase unit sales and the total sales by $86,000 per month. If the president is right, what will be the Increase (decrease) in the company's monthly net operating income? (Do not round Intermediate calculations.) by Req1 Reg 2 Req3 Reg 4 Reg 5A Reg 5B Req 5C Refer to the original data. The sales manager is convinced that a 10% reduction in the selling price, combined with an Increase of $37,000 in the monthly advertising budget, will double unit sales. If the sales manager is right, what will be the revised net operating income (loss)? (Losses should be entered as a negative value.) Revined not operating income (los) Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Reg 4 Req 5A Reg 5B Req 5C 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 packaging costs by $0.60 per unit. Assuming no other changes, how many units would have to be sold each month to attain a target profit of $4,500? (Do not round intermediate calculations. Round final answer to the nearest whole unit.) Show less Unit sales to attain target profit Req 1 Reg 2 Reg 3 Reg 4 Reg 5A Reg 58 Reg 5C Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $52,000 each month. Compute the new CM ratio and the new break-even point in unit sales and dollar sales. (Do not round Intermediate calculations. Round "CM ratio" to the nearest whole percentage (.e., 0.234 should be entered as "23") and other answers to the nearest whole number.) Show less CM ratio Break-evon point in unit sales Break-even point in dollar sales Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $52,000 each month. Assume that the company expects to sell 20,100 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.) (Do not round your intermediate calculations. Round your percentage answers to the nearest whole number.) Show less PEM, Incorporated Contribution Income Statement Not Automated Total Per Unit % Automated Per Unit Total % Reg 1 Reg 2 Req3 Reg 4 Reg SA Reg 5B Req 50 Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $52,000 each month. Would you recommend that the company automate its operations (Assuming that the company expects to sell 20,100 units)? Yes ONO

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Sound Investing, Chapter - Classification Deceit

Authors: Kate Mooney

2nd Edition

0071719385, 9780071719384

More Books

Students also viewed these Accounting questions

Question

=+b) Is this model appropriate for this series? Explain.

Answered: 1 week ago