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PEM, Incorporated, Is experlencing financlal 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.

Required:

Compute the company's $CM$ ratlo and Its break$-$even point In unit sales and dollar sales.

The president believes a $$6,100$ Increase in the monthly advertising budget, combined with an Intensified effort by the sales staff,

will Increase unit sales and the total sales by $$84,000$ per month. If the president is right, what will be the Increase $($decrease$)$ In the

company's monthly net operating Income?

Refer to the original data. The sales manager is convinced that a $10\%$ reduction In the selling price, combined with an Increase of

$$39,000$ in the monthly advertising budget, will double unit sales. If the sales manager is right, what will be the revised net

operating income $($loss$)?$

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 varlable costs by $$0\mathrm{.}60$ per unit. Assuming no other changes, how many units would have

to be sold each month to attaln a target profit of $$4,200?$

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

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

a$.$ Compute the new $CM$ ratlo and the new break$-$even polnt In unit sales and dollar sales.

b$.$ Assume the company expects to sell $20,600$ 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.$)$

c$.$ Would you recommend the company automate its operations $($Assuming that the company expects to sell $20,600$ units$)?$

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.

Note: Do not round intermediate calculations. Round $"$CM ratio" to the nearest whole percentage $($i$.$e$.,0\mathrm{.}234$ should be

entered as $"23".$

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