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5. Refer to the original data. By automating, the company could slash its variable expenses in half. However, fixed costs would increase by $41,000 per month. a. Compute the new CM ratio and the new break-even point in both units and dollars. (Do not round intermediate calculations. Round "Contribution Margin Ratio" to 2 decimal places.) Contribution margin ratio Break-even point in units Break-even point in dollars b. Assume that the company expects to sell 27,000 units next month. Prepare two contribution format income statements: one assuming that operations are not automated, and one assuming that they are. (Do not round intermediate calculations. Round "Per Unit" and "Percentage" to 2 decimal places.) Sales % Comparative Income Statements Not Automated Total Per Unit Percentage Total Automated Per Unit Percentage

5. Refer to the original data. By automating, the company could slash its variable expenses in half. However, fixed costs would increase by $41,000 per month. a. Compute the new CM ratio and the new break-even point in both units and dollars. (Do not round intermediate calculations. Round "Contribution Margin Ratio" to 2 decimal places.) Contribution margin ratio Break-even point in units Break-even point in dollars b. Assume that the company expects to sell 27,000 units next month. Prepare two contribution format income statements: one assuming that operations are not automated, and one assuming that they are. (Do not round intermediate calculations. Round "Per Unit" and "Percentage" to 2 decimal places.) Sales % Comparative Income Statements Not Automated Total Per Unit Percentage Total Automated Per Unit Percentage

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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5. Refer to the original data. By automating, the company could slash its variable expenses in half. However, fixed costs would increase by $41,000 per month. a. Compute the new CM ratio and the new break-even point in both units and dollars. (Do not round intermediate calculations. Round "Contribution Margin Ratio" to 2 decimal places.) Contribution margin ratio Break-even point in units Break-even point in dollars b. Assume that the company expects to sell 27,000 units next month. Prepare two contribution format income statements: one assuming that operations are not automated, and one assuming that they are. (Do not round intermediate calculations. Round "Per Unit" and "Percentage" to 2 decimal places.) Sales % Comparative Income Statements Not Automated Total Per Unit Percentage Total Automated Per Unit Percentage
Transcribed Image Text:5. Refer to the original data. By automating, the company could slash its variable expenses in half. However, fixed costs would increase by $41,000 per month. a. Compute the new CM ratio and the new break-even point in both units and dollars. (Do not round intermediate calculations. Round "Contribution Margin Ratio" to 2 decimal places.) Contribution margin ratio Break-even point in units Break-even point in dollars b. Assume that the company expects to sell 27,000 units next month. Prepare two contribution format income statements: one assuming that operations are not automated, and one assuming that they are. (Do not round intermediate calculations. Round "Per Unit" and "Percentage" to 2 decimal places.) Sales % Comparative Income Statements Not Automated Total Per Unit Percentage Total Automated Per Unit Percentage
Memofax, Inc. produces memory enhancement software for computers. Sales have been very erratic, with some months showing a profit and some months showing a loss. The company's contribution format income statement for the most recent month is given below: Sales (22,000 units at $25 per unit) Less: Variable expenses Contribution margin Less: Fixed expenses Net operating loss $550,000 330,000 220,000 225,000 $ (5,000)
Transcribed Image Text:Memofax, Inc. produces memory enhancement software for computers. Sales have been very erratic, with some months showing a profit and some months showing a loss. The company's contribution format income statement for the most recent month is given below: Sales (22,000 units at $25 per unit) Less: Variable expenses Contribution margin Less: Fixed expenses Net operating loss $550,000 330,000 220,000 225,000 $ (5,000)
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