Due to erratic sales of Its sole product-a high-capacity battery for laptop computers-PEM, Inc., has been experiencing financlal difficulty for some time. The company's contribution format income statement for the most recent month is given below: $ 264, 000 Sales (13,200 units x $20 per unit) Variable expenses 158,400 Contribution margin Fixed expenses 105,600 117,600 $ (12,000) Net operating loss Required: 1. Compute the company's CM ratio and Its break-even polnt in unit sales and dollar sales. 2 The president believes that a $6,100 Increase In the monthly advertising budget, combined with an Intensified effort by the sales staff, will result in an $81,000 Increase in monthly sales. If the 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 $37,000 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 $0.50 per unit. Assuming no other changes, how many units would have to be sold each month to attain a target profit of $4,200? 5. Refer to the original data. By automating, the company could reduce varlable expenses by $3 per unit. However, fixed expenses would Increase by $52,000 each month. a. Compute the new CM ratio and the new break-even polnt in unit sales and dollar sales. b. Assume that the company expects to sell 20,400 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 20,400)? Complete this question by entering your answers in the tabs below. Req 2 Req 4 Req 1 Reg 3 Req 5A Req 58 Req 5C Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $52,000 each month. Compute the new CM ratio and the new break-even point in unit sales and dollar sales. (Do not round intermediate calculations. Round "CM ratio" to the nearest whole percentage (i.e., 0.234 should be entered as "23") and other answers to the nearest whole number.) Show lessa CM ratio 55 % Break-even point in unit sales 15,419 Break-even point in dollar sales 308,364 < Req 4 Req 5B > Due to erratic sales of Its sole product-a high-capacity battery for laptop computers-PEM, Inc., has been experlencing financlal difficulty for some time. The company's contribution format Income statement for the most recent month Is glven below: $ 264, e00 158,400 Sales (13,200 units x $20 per unit) Variable expenses Contribution margin 105,600 117,600 Fixed expenses $ (12,000) Net operating loss Required: 1. Compute the company's CM ratlo and Its break-even polnt In unit sales and dollar sales. 2 The president belleves that a $6,100 Increase In the monthly advertising budget, comblned with an Intensified effort by the sales staff, will result In an $81,000 increase In monthly sales. If the 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 $37,000 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 $0.50 per unit. Assuming no other changes, how many units would have to be sold each month to attaln a target profit of $4,200? 5. Refer to the original data. By automating, the company could reduce varlable expenses by $3 per unit. However, fixed expenses would Increase by $52,000 each month. a. Compute the new CM ratlo and the new break-even polnt in unit sales and dollar sales. b. Assume that the company expects to sell 20,400 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 sell 20,400) Complete this question by entering your answers in the tabs below. Reg 3 Req 1 Req 5A Reg 58 Req 50 Req 2 Req 4 Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $52,000 each month. Assume that the company expects to sell 20,400 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.) (Do not round your intermediate calculations. Round your percentage answers to the nearest whole number.) Show less a PEM, Inc. Contribution Income Statement Not Automated Automated Total Per Unit Total Per Unit Sales 100 % 408,000 20 Variable expenses 158,400 40 % Contribution margin 60 % 249,600 12 Fixed expenses 117,600 Net operating income 132,000 < Req 5A Req 5C >