80.2K

Verified Solution

Link Copied!

I need help for this

CoursHeroTranscribedText: Due to erratic sales of its sole producta high-capacity battery for laptop computersFEM. Inc., has been experiencing nancial difculty for some time. The company's contribution format Income statement for the most recent month ls given below: sales (13,400 units I $30 per unit] 3 402,000 Variable expenses 201,000 Contribution margin 201,000 Fixed expenses 223,500 Net operating loss 5 [22,5001 ' 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 $6,400 Increase in the monthly advertising budget. combined with an intensified effort by the sales staff, will result in an 9590.000 increase in monthly sales. lfthe 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 selling price, combined with an increase of 3538.000 in the monthly advertising budget. will double unit sales. lfthe 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 cents per unit. Assuming no other changes, how many units would have to be sold each month to attain a target prot of $4,400? 5. Refer to the original data. By automating. the company could reduce variable expenses by $3 per unit. However. fixed expenses would increase by $55,000 each month. 3. 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 20.700 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 20.700]? Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Reg 3 Reg a Req SA Req SC Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit, However, fixed expenses would increase by $55,000 each month. Would you recommend that the company automate its operations (Assuming that the company expects to sell 20,700)? OND

Answer & Explanation Solved by verified expert

See Answer