PEM, Incorporated, is experiencing financial difficulty due to erratic sales of its only product, a high$-$capacity battery for laptop

computers. The company's contribution format income statement for the most recent month is given below:

Requlred:

Compute the company's CM ratio and its break$-$even point in unit sales and dollar sales.

The president believes $0$$$6,500$ incresse in the monthly odvertising budget, combined with an intensified effort by the sales staff,

will incresse unit sales and the total soles by $$86,000$ per month. If the president is right, whst will be the incresse $($decresse$)$ in the

compony's monthly net opersting income?

Refer to the original dato. The sales mansger is convinced that a $10\%$ reduction in the selling price, combined with an increase of

$$34,000$ in the monthly odvertising budget, will double unit sales. If the sales manager is right, what will be the revised net

operating income $($loss$)?$

Refer to the original dato. The Marketing Department thinks that o foncy new pocksge for the laptop computer bottery would grow

sales. The new pockage would incresse variable costs by $$0\mathrm{.}40$ per unit. Assuming no other changes, how many units would have

to be sold each month to attain o target profit of $$4,600?$

Refer to the original dats. By outomsting, the compony could reduce variable expenses by $$3$ per unit. However, fixed expenses

would incresse by $$59,000$ each month.

a$.$ Compute the new CM ratio and the new break$-$even point in unit sales and dollar sales.

b$.$ Assume the compony expects to sell $20,700$ units next month. Prepare two contribution format income statements, one

ossuming operstions are not sutomated and one assuming they are. $($Show dats on a per$-$unit and percentoge bosis, as well as in

totel, for each alternative.$)$

c$.$ Would you recommend the company outomate its operations $($Assuming that the company expects to sell $20,700$ units$)?$

Complete this question by entering your answers in the tabs below.

Refer to the original data. By automating, the company could reduce variable expenses by $$3$ per unit. However, fixed expenses

would increase by $$59,000$ each month. Assume the company expects to sell $20,700$ units next month. Prepare two contribution

format income statements, one assuming operations are not automated and one assuming they are. $($Show data on a per$-$unit and

percentage basis, as well as in total, for each alternative.$)$

Note: Do not round your intermediate calculations. Round your percentage answers to the nearest whole number.