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Problem 6-22 (Algo) CVP Applications; Contribution Margin Ratio; Break-Even Analysis; Cost Structure (L06-1, LO6-3, L06-4, LO6-5, LO6-6] 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: Salon (11,400 units to per unit) 5.402.000 Variable expennen 241,200 Contribution margin 160,800 Tixed expenses 178.300 Met operating loon $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 $83,000 per month. 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 $34.000 in the monthly advertising budget, will double unt sales, if the sales manager is right, what will be the revised net operating income (loss)? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Req4 Reg SA Reg 5B Reg 5C Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $55,000 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 (1.e., 0.234 should b entered as "23") and other answers to the nearest whole number.) Show less CM ratio Break-even point in unit sales Break-even point in dollar sales Saved Help Submit Save & Exit Graded ore-attempt HW Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $55,000 each month. Assume that the company expects to sell 20,100 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 PEM, Incorporated Contribution Income Statement Not Automated Total Per Unit % Automated Por Unit Total % 0 05 0 05 0 S 0 0 $

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