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PLZ HELP ASAP Due to erratic sales of its sole product-a high-capacily battery for laptop computers - PEM, Incorporated, has been experiencing financial difficuity for
PLZ HELP ASAP
Due to erratic sales of its sole product-a high-capacily battery for laptop computers - PEM, Incorporated, has been experiencing financial difficuity for some time. The company's contribution format income statement for the most recent month is qiven below: 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 $85,000 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 manages is convinced that a 10% reduction in the selling price, combined with an increase of $31.000 in the monthly advertising budget wit double unit sales. If the sales manoger is right whot 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. Assiming no other changes, how many units would have to be soid each month to attain a target profit of $4.200 ? 5. Refer to the oniginal data. By automating, the company could reduce varlatie expenses by $3 per unit. However, fixed expenses would increase by $53,000 each month. a. Compute the new CM tatio and the new break even point in unit sales and dollar sales. b. Assume that the company expects to sell 20,400 units next month. Prepare two contribution format income statements, one issiming 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 esch alternative) ic. Would you recommend that the company automate its operations (Assuming that the company expects to sell 20,400 units) Step by Step Solution
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