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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

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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 faptop computers-PEM, Incorporated, has been experiencing financial difficulty for some time. The company's contribution format income statement for the most recent month is given beiow: 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 $6,900 increase in the monthly advertising budget, combined with an intersifed effort by the sales. staff, will increase unit sales and the total sales by $90,000 per month. If the president is right, what will be the increase (decreate) in the company's monthy net operating income? 3. Pefer to the onginal dite. The sales manager is comvinced that a 10\% reduction in the seiling price, combined with an increose of $32.000 in the monthry advertising budget, will double unit sales. If the sales mandger is tight, what will be the tevised net openting income (loss)? A. Refer to the original data. The Marketing Depattment thinks that a toncy new package tor the laptep cambuter gartery would grow sales. The new package would increase packaping costs by so70 per unit, Assuming no other changes, how mary unes woukf have to be sold each manth to attain a target profit of $4,1007 5. Refer to the originat data. By automating. the company could reduce variable expenses by $3 per uniz. Howovect fieed expences would increase by $54,000 esch month. a. Compute the new CM ratio end the new break-even point in unit soles and dolioc sales: b. Assume that the company expects to sell 20,600 units next month. Prepare two contribution format incorme satemencs, ane assuming that operations are not automated and one assuming that they are. ishow data on a der unit and persentage balis as well as in totat, for ench alternativel c. Would you recommend that the company cutomate its operaeions (Assuming that the company expects to sed 20,600 unitu? wer as in total, for each alternative.) c. Would you recommend that the company automa Complete this question by entering your answers in the tabs below. Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, faxed expenses would increase by $54,000 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 (i.6. 0.234 should be entered as "23"), round "Break-even point in unit sales" up to the nearest whole unit and round "Break-even point in deilar sales" to the nearest whole dollar.) Complete this question by entering your answers in the tabs below. 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. 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.) (Do not round your intermiediate calculations. Round your percentage answers to the nearest whole number.) Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expe Nould 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, a assuming that operations are not automated and one assuming that they are. (Show dlata 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 20,600 units Complete this question by entering your answers in the tabs below. 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. Would you recommend that the company automate its operations (Assuming that the company expects to sell 20,600 units)

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