kipped Print Problem 6-22 (Algo) CVP Applications; Contribution Margin Ratio; Break-Even A [LO6-1, LO6-3, LO6-4, LO6-5, LO6-6] Due to erratic sales of its sole product-a high-capacity battery for laptop computers-PEM, Incorporated financial difficulty for some time. The company's contribution format income statement for the most recen Sales (12,800 units x $30 per unit) Variable expenses Contribution margin Fixed expenses Net operating loss $ 384,000 230,400 153,600 171,600 $ (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 $6,200 increase in the monthly advertising budget, combined with an inter staff, will increase unit sales and the total sales by $86,000 per month. If the president is right, what will be 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, combi $38,000 in the monthly advertising budget, will double unit sales. If the sales manager is right, what will be t income (loss)? 4. Refer to the original data. The Marketing Department thinks that a fancy new package for the lanto sales. The new package would increase packaging costs hy $0.60 to be sold each month

Problem 6-22 (Algo) CVP Applications; Contribution Margin Ratio; Break-Even A [LO6-1, LO6-3, LO6-4, LOG-5, LOG-6] Due to erratic sales of its sole product-a high-capacity battery for laptop computers-PEM, Incorporated financial difficulty for some time. The companys contribution format income statement for the most recer 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 $6.200 increase in the monthly advertising buclget, combined with an inte statf, will increase unit sales and the fotal sales by $86,000 per month, If the presictent is right. what will be the company's manthiy net operating income? 3. Refer to the giginal data. The soles manager is canvinced that a 10% reduction in the sening price, comb $38,000 in the montivy advertising budget. Will double unit sales. If the soles manager is right, what will be insome (loss)? 4. Refer to vie originsi data. The Marketing Department thinks that a fancy new packoci for tha sales. The new packache would ilhorease packagine to be so ncome (loss)? 7. Refer to the original data. The Marketing Department thinks that a fancy new package for the la sales. The new package would increase packaging costs by $0.60 per unit. Assuming no other ch be sold each month to attain a target profit of $4,300 ? 5. Refer to the original data. By automating, the company-could reduce variable expenses by $3p would increase by $55,000 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 f assuming that operations are not automated and one assuming that they are. (Show data on a p well as in total, for each alternative.) c. Would you recommend that the company automate its operations (Assuming that the company Complete this question by entering your answers in the tabs below. Compute the company's CM ratio and its break-even point in unit sales and dollar sales. (Do not round in calculations. Round "CM ratio" to the nearest whole percentage (1.e., 0.234 should be entered as "23")