Problem 6-22 (Algo) CVP Applications; Contribution Margin Ratio; Break-Even Analysis; Cost Structure [LO6-1, LO6-3, LO6-4, LO6-5, LO6-6] Due to erratic sales of its sole product-a high-capacity battery for laptop computers-PEM, incorporated, has been experiencing financial difficulty for some time. The company's contribution fotmat income statement for the most recent month is given below: Required: 1. Compute the company's CM ratio and its break-even point in unit sales and dollar soles. 2. The president believes that a $6,900 increase in the monthly advertising budget, combined with an intensified effort by the sales stafl, will increase unit sales and the total sales by $90,000 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 s reduction in the seling price, combined with an increase of $32,000 in the monthly advertising budget, will double unit sales. Hf the soles manager is right, what will be the revised net operating income (ioss)? 4. Refer to the original data. The Marketing Department thinks that a fancy new package for the laptop computer battery would grow saies. The new packago would increase packaging costs by $0.70 per unit. Assuming no other changes, how many unis would hove to be sold each month to attain a target profit of $4,100 ? 5. Refer to the original data. By automating, the compony could reduce varioble expenses by $3 per unit. However, fixed expenses would increase by $54,000 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 20,600 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 eoch altemative.) c. Would you recommend that the company automate its operations (Assuming that the company expects to sell 20,600 units)? ncome (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 egach month to attain a target profit of $4,100 ? 5. Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $54,000 each month. a. Compute the new CM ratio and the new break-even point in unit sales and dotlar sales. b. Assume that the company expects to sell 20,600 units next month. Prepare two contribution format income stotements, one assuming that operations are not automated and one assuming that they are. (Show data on a per unit and percentage basis, 85 well as in total, for each alternative.) c. Would you recommend that the company automate its operations (Assuming that the company expects to sell 20,600 units)? Complete this question by entering your answers in the tabs below. Computn the company's CM ratio and its break-even point in unit sales and dollar sales. (Do not round intermediate Calcuititions. Poounid "cM ratio" to the nearent whole percentage (c.e. 0.234 should be entered as =237. 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 hove to be sold each month to attain a target protit of $4,100 ? 5. Refer to the original data. By automating, the company could reduce varlable expenses by $3 per unit. However, fixed expenses would increase by $54,000 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 20,600 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 20,600 units)? Complete this question by entering your answers in the tabs below. The bresident believes that a $6,900 increase in the monthly adyertiting bucget, combined with an iatensitied effort by the sales staff, will increase unit sales and the total sales by 390,000 per month. If the president is right, what will be the (decrease) in the compamy's monthly net operating income? (Do not roums ateminediate calculationc) 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 (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 hawe to be sold each month to attain a target profit of $4,100 ? 5. Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $54,000 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 20,600 units next month. Prepare two contribution format income statemonts, one assuming that operations are not automated and one assuming that they are. (Show data on a per unit and percentage bseis. as well as in total, for each alternative.) c. Would you recommend that the compony automate its operations (Assuming that the company expects to sell 20,600 units)? Complete this question by entering your answers in the tabs below. Pefer to the original data. The sales manager is cominced that a 1096 neduction in the seling irice, cambined pieh wi increase of $32,000 in the monthly advertising budget, will double unit sales. If the sales manager is ficht, what will be the reviced net ooerating income (ioss)? (Losses should be entered at a neroative valice.) income (ioss)f 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 soid each month to attain a target profit of $4,100 ? 5. Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $54,000 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 20,600 units next month. Prepare two contribution format income statements, oneassuming 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 20.600 units)? Complete this question by entering your answers in the tabs below. Refer to the original data. The Marketing Department thinks that a fincy new package for the laptop computer battery wounf grew sales, The new package would increase packaging coste by so. 70 per unit. Assuming no other changes, haw itsicy uhits would have to be sold each month to attain a target prof t of $4,1007 (Do not round intermediate calculationis. Round firal answer up to the nearest whole unit.)