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Problem 6-22 CVP Applications Contribution Margin Ratle: Break Even Analysis Cost Structure (LO61, 06-3, LO64, LOG-S, LOG-6) Due to eat les of its sole produd a high-capacity battery for laptop computers-PEM, Inc, has been experiencing financial difficult for some time. The company's contribution format income statement for the most recent month is oven below Sales (12,700 units $28 per unit) Variable expenses Contribution margin Fixed expenses Net operating loss $ 254,000 152,400 101,600 113.60 $ 12,000) Required: Compute the company's CM ratio and its break even point in unit sales and dollar sales 2. The president believes that a $6,400 increase in the monthly advertising budget combined with an intensified effort by the sales staff will result in an $87.000 increase in montre les 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 incinte of $38.000 in the monthly advertising budget, will double nitalesthe sales manager is ght, what will be the revised not operating income poss? 4. Refer to the original data. The Marketing Department is that a fancy new package for the laptop computer battery would grow sales. The red package would increase poging costs by 10.50 per unit. Assuming no other changes, how many units would have to be sold each months totain a target proft of $4,500 S. Refer to the originaldate. By automating the company could reduce variable expenses by 33 per unit. However, we expenses would incense by $54,000 each month Compute the new CM to and the new break even point in sales and dollar sales Assume that the company expects to sell 20.700 units next month. Prepare two contribution format income statements, one assuming that operations are not automated and one assuming that they are show da ona per unit and percentage basis, as well as total for each herative c. Would you recommend that the company automatis operations (Assuming that the company expects to sell 20.7007 Answer is not complete. Complete this question by entering your answers in the tabs below. Reg 1 HG 2 Reg) Req4 Reg SA Reg 58 Rags Hater 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 $0.50 per unit. Assuming no other changes, how many units would have to be sold morth to attain a target profit of $4,5007 (Do not round intermediate calculations. Round final answer to the nearest whole unit.) 21.473 (Regs Meg GA > 2 Problem 6-22 CVP Applications Contribution Margin Ratio Break Even Analysis. Con Structure (LO6-4, 106-3, L06-4, LOG-5, L06-6) Due toric sales of its sole product-a high-capacity battery for laptop computers -PEM, Inc. has been experiencing financial aficulty for some time. The company's contribution format income statement for the most recent month is given below Sales (12,700 units $20 per unit) Variable expenses Contribution margin Fixed expenses Net operating loss $ 250.000 152,400 101,600 10.600 $ 12,000) Required: 1 Compute the companys CM ratio and its break even point in unit sales and dollar sales 2. The president believes that a $6.400 increase in the month advertising budget combined with an intensified effort by the sales start will not in an 507.000 case in monthly sales the president is right what will be the increase decrease in the company's monthly net operating income? fer to the original data. The sales manager is convinced that a 10% reduction in the seting price combined with an increase of $36.000 in the monthly nevertising budget we Pfer to the originaldate The Marketing Department thinks that a fancy new package for the laptop computer battery would grow sales. The new package would increase packaging co by 50 50 punt Assuming no other changes, how many units would have to be sold each monts to attain target profit of $4,5007 5. Refer to the original data by utomating, the company could reduce variable expenses by 33 per unit. However, fed expenses would increase by 554.000 each month a. Compute the new CMO and the new breve point is unit sales and dorsales Assume that the company expects to well 20.700 units next month. Prepare two contribution format income statements, one suming at operations are not automated and One suming that they are show data on a pornit and percentage basis, as well as in tot for each alternative Would you recomand at the company automate its operations (Asing the company expeds to set 207007 Answer is not complete, Complete this question by entering your answers in the tabs below. Hea Reg 2 Req Reg 4 Red SA Reg 55 Reg SC Refer to the original data. By automating, the company could reduce variable expenses by $5 per unit. However, fixed expenses would Increase by $54,000 each month Compute the new CM ratio and the new break-even point in unit sales and dollar sales. (Do not found intermediate calculations, Round 'CM ratio to the nearest whole percentage (1.0.234 should be entered as "23") and other answers to the nearest Whole number) Show less CM Broskevan point in unit sales Breeven point in dollars 45 186223 372.444 X Due to nic sales of its sole product-a high-capacity battery for top computers -PEM, Inc. has been experiencing facility for some time. The company's Cortion format income statement for the most recentment is given below 428 port Sales (12,700 units 520 per unit) Variable expenses Contribution margin Fixed expenses Net operating loss $ 254,000 152.100 101,600 232, Gee $ (12.000) 3. Required 1. Compute the company's Mao and to break even point in sales and details 2. The president believes at $0,400 increase in the monthly advertising budget combined with ned effort by the staff will result in an $87,000 incremen mere et the president is right what will be the increste decrease in the concery monthly net operating income? s convinced that a reduction in the soling price.combined with an increase of 538.000 in the monthly advertising Budget double packing cont by $0.50 point. Assuming ne other hangelow Per to the originaleta The Micketrend not operating income in that a fancy new con for the lipop computer battery would grow seles. The new package would creme changes. How many would have to be sold each month to attain target profit of $4,500 5. Refer to the in unites and dofarses b. Anume at the company expect to sell 2000 UN nest month. Prepare two contribution format income statements, one assuming that cerations are not automated and one migratore Show dete one berunt and percentages, as well as in total for each alternative) Would you recommend the company automats operations Aming at the company specs to sell 2070017 Answer is not complete. portin by 554.000 schon Complete this question by entering your answers in the tabs below. Reg! Reg2 Reg 4 Reg SA Reg 50 Req5C Refer to the original data. By automating, the company could reduce variable expenses by 3 perunt. However, the expenses would increase by $54,000 each month. Amone that the company expects to sell 20,700 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.) 600 not round your intermediate calculations found your percentage anwers to the nearest whole number) Show less PEM, Inc. Contribution Income Statement Not Automated Automated Total Per Unit % Total Per Un 20 100% Varable egenses Contribution margin 0 s 20 100 0 5 D O Feed expenses Not operating income 15 0 0 OOOO

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