Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please help, i need #2-5 Due to erratic sales of its sole product-a high-capacity battery for laptop computers--PEM, Inc. has been experiencing financial difficulty for

Please help, i need #2-5 image text in transcribed
Due to erratic sales of its sole product-a high-capacity battery for laptop computers--PEM, Inc. has been experiencing financial difficulty for some time. The company's contribution format income statement for the most recent month is given below. Sales (12,600 units $30 per unit) Variable expenses Contribution margin Fixed expenses Net operating loss $ 378,000 226 800 151200 169,200 $ 18,000) Required: 1. Compute the companys CM ratio and its break even point in unit sales and dollar sales 2. The president believes that a $6.700 Increase in the monthly advertising budget, combined with an intensified effort by the sales staff will increase unit sales and the total sales by $81,000 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 selling price, combined with an increase of $32,000 in the monthly advertising budget will double unit sales. If the sales manager is right, what will be the revised net operating income foss)? 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 $4 400? 5. Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, flwed expenses would increase by $60,000 each month a. Compute the new CM ratio and the new break even point to unit sales and dollar sales b. Assume that the company expects to sell 20.000 units next month. Prepare iwo 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 20.000 units)

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

Count Down The Past, Present And Uncertain Future Of The Big Four Accounting Firms

Authors: Jim Peterson

2nd Edition

1787147010, 9781787147010

More Books

Students also viewed these Accounting questions