Answered step by step
Verified Expert Solution
Question
1 Approved Answer
please help, thanks 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.
please help, thanks
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 (13,300 units $30 per unit) 399,000 Variable expenses contribution margin Fixed expenses 199,500 199,500 222,000 (22,500) Net operating los 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 $6,200 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an $90,000 increase in monthly soles. 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 $36,000 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 t sales. The new package would increase packaging costs by 0.40 cents per unit. Assuming no other chpnges, how many units would have to be sold each month to attain a target profit of $4,700? o the original data. The Marketing Department thinks that a fancy new package for the laptop computer battery would grow s. Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $53,000 each month. a. Compute the new CM ratio and the new break-even point in unit sales and dollar sales. b. Assume that the company expects to sell 20,500 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 wel as in total, for each alternative.) c. Would you recommend that the company automate its operations (Assuming that the company expects to sell 20,500)? Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4 Req 5A Req 5B Req 5C Compute the company's CM ratio and its break-even point in unit sales and dollar sales. (Do not round intermediate calculations.) CM ratio Break-even point in unit sales Break-even point in dollar sales 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