Sales (12,900 X $20 per unit) = $258,000

Variable Expense = $154,800

Contribution Margin = $103,200

Fixed Expenses =$115,200

Net operating loss =$(12,000)

1. Compute the companies CM ratio and its break-even point in unit sales and dollar sales.

2. Refer to the data. The sales manager is convinced that a 10% reduction in the selling price, combined with an increase of $34,000 in the monthly advertising budget, will double unit sales. If the sales manager is right, what will be the revised net operating income (loss)?

3. Refer to the 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. Assuming no other changes, how many units would have to be sold each month to attain a target profit of $4,900?

4. Refer to the data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $60,000 each month. Compute the new CM ratio and the new break-even point in unit sales and dollar sales.