Problem 5-22 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 units $20 per unit) Variable expenses Contribution nargin Fixed expenses Net operating loss $ 258,000 129,000 129,000 144,000 (15,000) 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 $6,500 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an $81,000 increase in monthly sales. 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 $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 (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 cents per unit. Assuming no other changes, how many units would have to be sold each month to attain a target profit of $4,400? would increase by $55,000 each month a. Comput b. Assume that the compan original data. By automating. the company could reduce variable expenses by $3 per unit. However, fixed expenses e the new CM ratio and the new break-even point in unit sales and dollar sales. y expects to sell 20,200 units next month. Prepare two contribution format income statements, one ations 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. Woul ld you recommend that the company automate its operations (Assuming that the company expects to sell 20,200)? Complete this question by entering your answers in the tabs heiom Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4 Req 5A Req 58 Req 5C Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However by $55,000 each month. Assume that the comp statements, one assuming that operations are not automated and one assuming that they are. (Show data on a as well as in total, for each alternative.) (Do not round your intermediate calculations. Round your percentage number.) pany expects to sell 20,200 units next month. Prepare two contribution format i answers to the r PEM, Inc. Contribution Income Statement Not Automated Automated Total Per Unit Total Per Unit Sales Variable expenses Contribution margin Fixed expenses Net operating income 01% 0196 Req 5A Req 5C> Help Save & Idouble un sales manager is right, what will be the revised net operating $32,000 in the monusy income (oss)? . Refer to the original data. The Marketing DepartmenL sales. The new package would increase packaging costs by 0.60 cents 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, fwed expenses would increase by $55,000 each month a Compute the new CM ratio and the new break-even point in unit sales and dolar sales b. Assume that the company expects to sell 20.200 units next month. Prepare two contribution format income statements, one a fancy new package for the laphop computer battery would grow assuming that operations are not automated and one assuming that they are. (Show data on a per unit and percentange basis, as wei c. Would you recommend that the company automate its operations (Assuming that the company expects to sel 20.200 Complete this question by entering your answers in the tabs below. 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 60 cents per unit. Assuming no other changes, how many units would have to be sold each month to attain a target profit of $4,400? (Do not round intermediate calculations. Round final answer to the nearest whole unit) Show less Prev 7 of 8 Next > MacBook Pro Q Search or enter website name 5 6 8 Help Save & Exih 7 $32.000 in the monthiy advertising budget, will double unit sales. if the seles manager is right, what w Income foss)? will double unit sales. if the sales manager is right, what will be the revised net operating a Refer to the original data. The Marketing Department thiniks that a fancy new package for the laptop computer banery would grow sales. The new package wouid have to be sold each month to attain a target profit of $4,400? 5. Refer to the original would increase by $55.000 each month a. Compute the new CM ratio and the new break-even point in unit sales and dolar sales b. Assume that the company expects to sell 20,200 units ncrease packaging costs by 060 cents per unit. Assuming no other changes, how many unts data. By automating, the company could reduce variable expenses by $3 per unit. However, twed expenses next month Prepare two contribution format income statements, one g that operations are not automated and one assuming that they are (Show dsta on a per unit and percentage basis, as well assumin as in total, for each alternative) c Would you recommend that the company automate its operations (Assuming that the company ex Complete this question by entering your answers in the tabs below. Req 2 the company could reduce variable expenses by $3 per unit. However, fixed Refer to the original data. By automating, company expenses would increase by 55,000 each month. Compute the new CM ratio and the dolar sales. (Round "CM ratio" to the nearest whoie percent and other ansvers to the nearest whole number) new break-even point in unit sales and unit sales pont in point in dolar sales MacBook Pro Q Search or enter website name 2 3 5 6 7 8