Question

s People Tue 12 23 AM O Connect Secure htt Help Save & Ext Submi Due to erratic sales of its sole product-s high-capacity battery for laptop computers-PEM, Inc, has been experlencing financia difficulty for some time. The company's contribution format income statement for the most recent month is glven below 4 sales (12,800 units- 530 per unit)3 variahle oparain Pixed expensea Net operating losa 384,050 171 630 1 Compute the company's CM ratio and its break-even point in unit sales and dollar sales. 2. The president believes that a $6,500 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an $85,000 increase in monthly sales. If the president is right, whet will be the Increase (decrease) In the company's monthly net operating income? 3.Refer to the original data. The sales manager is convince that a 10% reduction In the seling price, combined wth an inerease of 38,000 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 80 cents per unit. Assuming no other changes, how many units would have to be sold each month to attain a target profit of $4,700? 5. Refer to the ongnal data. Dy automating, the company could reduce variable expenses by $3 per unit. Howieve: fixed expenses would increase by $53,000 each month. a. Compute the new CM ratio and the new break-even point in unit sales and doller sales b. Assume that the company expects to sel 20,200 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 Prex 4 of 4 Next 2 3 4 5 6 7 8 9

Answer 1