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Due to erratic sales of its sole product-a high-capacity battery for laptop computers--PEM, Incorpora , has been experiencing financial difficulty for some time. The company's contribution format income statement for the moscent month is given below. Sales (19,500 units $30 per unit) $ 585,000 Variable expenses 409,500 Contribution margin 175,500 Fixed expenses 180.000 Net operating 100 $(4,500) 10.17 Required: 1. Compute the company's CM ratio and its break-even point in sales and dollar sales. 2. The president believes that a $16,000 increase in the mapthly advertising budget, combined with an intensified effort by the sales staff , will increase unit sales and the total sales by $80,000 per month. If the president is right, what will be the increase (decrease) in Semanis month antenerating income? manager is convinced that a 10% reduction in the selling price, combined with an increase of $60,000 in the monthly advertising buboet, Willycrouble 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 increases .ckaging costs by 75 cents per unit. Assuming no other changes, how many units would have to be sold each month to attain garget profit of $9,750? 5. Refer to the original data. By automating the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $72,000 each honth a, Compute the new CM rajy and the new break-even point in unit sales and dollar sales. b. Assume that the company expects to sell 26,000 units next month. Prepare two contribution format income statements, one assuming that operations fe not automated and one assuming that they are. (Show data on a per unit and percentage basis, as well as in total, for enternative.) c. Would your that the company automate its operations (Assuming that the company expects to sell 26,000 units)? calculations.) % CM ratio Break-even point in unit sales Break even point in dollar sales Complete this question by entering your answers in Req Rec Reg SA Reg 5B Reg SC The president belleves that a $16,000 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will increase unit sales and the tal sales by $80,000 per month. If the president is right, what will be the Increase (decrease) in the company's sarithly net operating income? (Do not round intermediate calculations.). by Complete this question by entering your answers in the tabs below. Reg 2 Req1 Req3 Reg 4 Req5A Reg 5B Reg SC Refer to the original data. The sales manager is convinced that a 10% reduction in the selling price, combined with an increase of $60,000 in the monthly gavertising budget, will double unit sales. If the sales manager is right, what will be the revised net operating Income (lossa? (Losses should be entered as a negative value.) Rovined not operating income (lon c. Would you recommend that the compil Complete this question by entering your answers in the tabs below. Reg SA Reg 58 Reg 5C Reg 4 Reg 1 Reg 2 Req3 Refer to the original data. The Marketing Department Sinks that a fancy new package for the laptop computer battery would grow sales. The new package would increase packaging costs by 75 cents per unit. Assuming no other changes, how many units would have to be sold each oronth to attain a target profit of $9,7507 (Do not round Intermediate calculations) Unit sales to attain target profit BOLSA Complete this question by entering your answers in the sos below. Reg 4 Req 5A Reg 58 Req 5C Refer to the original data. By automating, company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $72,000 each plamth. Compute the new CM ratio and the new break-even point in unit sales and dollar sales CM ratio % Break-even point in unit sales Break-even point in dollar sales Complete this question by entering your answers in the tabs below. Reg 2 Reg 1 Reg 3 Req 5A Reg 58 Req 5C Refer to the original data. By automating, fe company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $72,000 month. Would you recommend that the company automate its operations (Assuming that the company expect to sell 26,000 units)? 10Yes ONO

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