Problem 5-22 (Algo) CVP Applications; Contribution Margin Ratio; Break-Even Analysis; Cost Structure (LO5-1, LO5-3, LO5-4, LO5-5, LO5-6) 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 (12,900 unite * $20 per unit) Variable expenses Contribution margin Fixed expenses Set operating loss $ 258,000 154,800 103,200 115,200 5 (12,000) 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 $6,300 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 manager is convinced that a 10% reduction in the selling price combined with an increase of $37000 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 $0.70 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. 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 20,100 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, os well as in total, for each alternative) c. Would you recommend that the company automate its operations (Assuming that the company expects to sell 20100 units)? Complete this question by entering your answers in the tabs below. Reg 1 Reg2 Rega Reg4 He SA Req 50 Reg SC The president believes that 56,300 increase in the monthly advertising buget, combined with an intensified effort by the sales staff, will increase unit sales and the total sales by 585,000 per month of the president is right, what will be the increase (decrease in the company's monthly net operating income? (Do not round Intermediate calculations by Problem 5-22 (Algo) CVP Applications; Contribution Margin Ratio; Break-Even Analysis; Cost Structur (LO5-1, LO5-3, L05-4, LO5-5, LO5-6) Due to erratic sales of its sole product-a high-capacity battery for laptop computers-PEM, Inc., has been experiencing financiar difficulty for some time. The company's contribution format income statement for the most recent month is given below: Sales (12,900 units * $20 per unit) Variable expenses Contribution margin Fixed expenses Net operating loss $ 250,000 154,800 103,200 115,200 $ (12,000) 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 $6,300 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 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 (oss)? 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 $0.70 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. 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 20.100 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 Re 4 Reg SA Reg 58 Req 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 (le, 0.234 should be entered as "23") and other answers to the nearest whole number.) Show less CM ratio Break-even point in unit ses Break-even point in dollar sal les (12,900 units * $20 per unit) ariable expenses ontribution margin ixed expenses et operating loss $ 258,000 154,800 103,200 115,200 $ (12,000) quired: Compute the company's CM ratio and its break-even point in unit sales and dollar sales, The president believes that a $6,300 increase in the monthly advertising budget, combined with an intensified effort by the les staff , will increase unit sales and the total sales by $85,000 per month. If the president is right, what will be the increase ecrease) in the company's monthly net operating income? 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 perating income (loss)? Refer to the original data. The Marketing Department thinks that a fancy new package for the laptop computer battery would row sales. The new package would increase packaging costs by $0.70 per unit. Assuming no other changes, how many units vould 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. 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 20,100 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. Reg 1 Reg 2 Reg 3 Reg 4 Req SA Req 58 Reg SC 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, Inc. Contribution Income Statement Not Automated Total Per Unit % % Automated Total Por Unit % % % % % RATA Ben 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 $6,300 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 manager is convinced that a 10% reduction in the selling price, combined with an incre $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 woul grow sales. The new package would increase packaging costs by $0.70 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 exper would increase by $52,000 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 20,100 units next month. Prepare two contribution format income statements, on assuming that operations are not automated and one assuming that they are. (Show data on a per unit and percentage basis 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. Reg 1 Reg 2 Reg 3 Reg 4 Reg SA Reg 58 Rog SC 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)? 10 Yos ONO