Problem 6-22 CVP Applications; Contribution Margin Ratio; Break-Even Analysis; Cost Structure [LO6-1, LO6-3, LO6-4, LO6-5, LO6-6]...

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Problem 6-22 CVP Applications; Contribution Margin Ratio; Break-Even Analysis; Cost Structure [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, 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 (13,000 units x $20 per unit) Variable expenses Contribution margin. Fixed expenses Net operating loss $ 260,000 130,000 130,000 145,000 $ (15,000) Compute the company's CM ratio and its break-even point in unit sales and dollar sales. (Do not round intermediate calculations.) CM ratio Break-even point in unit sales Break-even point in dollar sales % < Req 1 Req 2 > Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Req 3 by Req 4 Req 5A < Req 1 Req 5B The president believes that a $6,700 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an $80,000 increase in monthly sales. If the president is right, what will be the increase (decrease) in the company's monthly net operating income? (Do not round intermediate calculations.) Req 5C Req 3 > Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4 Req 5A < Req 2 Req 5B Refer to the original data. The sales manager is convinced that a 10% reduction in the selling price, combined with an increase of $38,000 in the monthly advertising budget, will double unit sales. If the sales manager is right, what will be the revised net operating income (loss)? (Losses should be entered as a negative value.) Revised net operating income (loss) Req 5C Req 4 > Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Unit sales to attain target profit Reg 4 Req 5A < Req 3 Req 5B 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 70 cents per unit. Assuming no other changes, how many units would have to be sold each month to attain a target profit of $4,200? (Do not round intermediate calculations. Round final answer to the nearest whole unit.) Req 5C Req 5A > Show less Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 CM ratio Break-even point in unit sales Break-even point in dollar sales Req 4 % Req 5A 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 percent and other answers to the nearest whole number.) < Req 4 Req 5B Req 5C Req 5B > Show less Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Req 3 Req 4 Total Req 5A 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 21,000 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.) (Round your percentage answers to the nearest whole number.) PEM, Inc. Contribution Income Statement Not Automated Per Unit < Req 5A % Req 5B % % % Req 5C Total Automated Per Unit Req 5C > % % % % Show less A Complete this question by entering your answers in the tabs below. Req 1 Req 2 Yes No Req 3 Req 4 Req 5A < Req 5B Req 5B 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. Would you recommend that the company automate its operations (Assuming that the company expects to sell 21,000)? Req 5C Req 5C > Problem 6-22 CVP Applications; Contribution Margin Ratio; Break-Even Analysis; Cost Structure [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, 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 (13,000 units x $20 per unit) Variable expenses Contribution margin. Fixed expenses Net operating loss $ 260,000 130,000 130,000 145,000 $ (15,000) Compute the company's CM ratio and its break-even point in unit sales and dollar sales. (Do not round intermediate calculations.) CM ratio Break-even point in unit sales Break-even point in dollar sales % < Req 1 Req 2 > Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Req 3 by Req 4 Req 5A < Req 1 Req 5B The president believes that a $6,700 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an $80,000 increase in monthly sales. If the president is right, what will be the increase (decrease) in the company's monthly net operating income? (Do not round intermediate calculations.) Req 5C Req 3 > Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4 Req 5A < Req 2 Req 5B Refer to the original data. The sales manager is convinced that a 10% reduction in the selling price, combined with an increase of $38,000 in the monthly advertising budget, will double unit sales. If the sales manager is right, what will be the revised net operating income (loss)? (Losses should be entered as a negative value.) Revised net operating income (loss) Req 5C Req 4 > Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Unit sales to attain target profit Reg 4 Req 5A < Req 3 Req 5B 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 70 cents per unit. Assuming no other changes, how many units would have to be sold each month to attain a target profit of $4,200? (Do not round intermediate calculations. Round final answer to the nearest whole unit.) Req 5C Req 5A > Show less Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 CM ratio Break-even point in unit sales Break-even point in dollar sales Req 4 % Req 5A 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 percent and other answers to the nearest whole number.) < Req 4 Req 5B Req 5C Req 5B > Show less Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Req 3 Req 4 Total Req 5A 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 21,000 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.) (Round your percentage answers to the nearest whole number.) PEM, Inc. Contribution Income Statement Not Automated Per Unit < Req 5A % Req 5B % % % Req 5C Total Automated Per Unit Req 5C > % % % % Show less A Complete this question by entering your answers in the tabs below. Req 1 Req 2 Yes No Req 3 Req 4 Req 5A < Req 5B Req 5B 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. Would you recommend that the company automate its operations (Assuming that the company expects to sell 21,000)? Req 5C Req 5C >

Answer rating: 100% (QA)

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