Due to erratic sales of its sole product-a high-capacity battery for laptop computers-PEM, Inc., has been experiencing financial difficulty for some time. The company's contribution format income statement for the most recent month is given below: Sales (13,400 units x $40 per unit) Variable expenses Contribution margin Fixed expenses Net operating loss $ 536,000 321,600 214,400 238,400 $ (24,000) er to the original data. By automating, the company, could reduce variable expenses by $3 per unit. However, fixed enses would increase by $56,000 each month.
Due to erratic sales of its sole product-a high-capacity battery for laptop computers-PEM, Inc., has been experiencing financial difficulty for some time. The company's contribution format income statement for the most recent month is given below: Sales (13,400 units x $40 per unit) Variable expenses Contribution margin Fixed expenses Net operating loss $ 536,000 321,600 214,400 238,400 $ (24,000) er to the original data. By automating, the company, could reduce variable expenses by $3 per unit. However, fixed enses would increase by $56,000 each month.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Due to erratic sales of its sole product-a high-capacity battery for laptop computers-PEM, Inc., has been experiencing financial
difficulty for some time. The company's contribution format income statement for the most recent month is given below:
Sales (13,400 units x $40 per unit)
Variable expenses
Contribution margin
Fixed expenses
Net operating loss.
Refer to the original data. By automating, the company, could reduce variable expenses by $3 per unit. However, fixed
expenses would increase by $56,000 each month.
www
CM ratio
Break-even point in units
Break-even point in dollars
$ 536,000
321,600
214,400
238,400
$ (24,000)
LEI
Compute the new CM ratio and the new break-even point in unit sales and dollar sales. (Round "CM ratio" to the nearest
whole percent and other answers to the nearest whole number.)
48 %
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