Due to erratic sales of its sole product-a high-capacity battery for laptop computers-PEM, Incorporated, has been experiencing financial difficulty for some time. The company's contribution format Income statement for the most recent month is given below Sales (12,500 units - $38 per unit) $ 378,000 226,880 Variable expenses Contribution margin Fixed expenses 160,200 Net operating loss $ (18,000) 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 $6,600 Increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will increase unit sales and the total sales by $82,000 per month. If the president is right, what will be the Incresse (decresse) in the company's monthly net operating Income? 3. Refer to the original diets. The sales manager is convinced that s 10% reduction in the selling price, combined with an increase of $39,000 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 dists. 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 per unit. Assuming no other changes, how many units would have to be sold each month to attain a target profit of $4,400? 5. Refer to the original dists. By automating, the company could reduce variable expenses by $3 per unit. However, 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 dollar sales. b. Assume that the company expects to sell 20,900 units next month. Prepare two contribution formst income statements, one assuming that operations are not automated and one assuming that they are. (Show dists on a per unit and percentage basis, as well as in total, for each slternative.) c. Would you recommend that the company automate its operations (Assuming that the company expects to sell 20,900 units)? Complete this question by entering your answers in the tabs below. Reg 2 Reg 3 Reg 4 Rag SA Reg 58 Rag SC 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 per unit. Assuming no other changes, how many units would have to be sold each month to attain a target profit of $4,400? (Do not round intermediate calculations. Round final answer to the nearest whole unit.) Show less
Due to erratic sales of its sole product-a high-capacity battery for laptop computers-PEM, Incorporated, has been experiencing financial difficulty for some time. The company's contribution format Income statement for the most recent month is given below Sales (12,500 units - $38 per unit) $ 378,000 226,880 Variable expenses Contribution margin Fixed expenses 160,200 Net operating loss $ (18,000) 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 $6,600 Increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will increase unit sales and the total sales by $82,000 per month. If the president is right, what will be the Incresse (decresse) in the company's monthly net operating Income? 3. Refer to the original diets. The sales manager is convinced that s 10% reduction in the selling price, combined with an increase of $39,000 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 dists. 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 per unit. Assuming no other changes, how many units would have to be sold each month to attain a target profit of $4,400? 5. Refer to the original dists. By automating, the company could reduce variable expenses by $3 per unit. However, 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 dollar sales. b. Assume that the company expects to sell 20,900 units next month. Prepare two contribution formst income statements, one assuming that operations are not automated and one assuming that they are. (Show dists on a per unit and percentage basis, as well as in total, for each slternative.) c. Would you recommend that the company automate its operations (Assuming that the company expects to sell 20,900 units)? Complete this question by entering your answers in the tabs below. Reg 2 Reg 3 Reg 4 Rag SA Reg 58 Rag SC 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 per unit. Assuming no other changes, how many units would have to be sold each month to attain a target profit of $4,400? (Do not round intermediate calculations. Round final answer to the nearest whole unit.) Show less
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please answer the 2 sections in the images. #4 & #5B
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