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Rehema Corporation, a company located in the beautiful Pacific NorthWest, manufactures a single product in its Tacoma Factory. Sales

have been very erratic lately, and the financial health of the company is in jeopardy. For the most recent month, Rehema's contribution

format income statement is as follows:

Required:

Compute Rehema's break$-$even point in units and also in dollar sales.

A proposal is being made by management to increase monthly advertising by $$6,900.$ It is estimated that this advertising will yield

an increase of $$80,000$ in sales per month. Using this proposal, what will be the increase $($decrease$)$ in the company's monthly net

operating income?

Refer to the original data. A second alternative proposal recommends that the selling price be reduced by $10\%$ followed by an

increase in monthly advertising of $$36,000.$ This will double unit sales. Using this alternative proposal, what will be the revised net

operating income $($loss$)?$

Refer to the original data. A third proposal has emerged. If the company replaces its labor force with automation, variable expenses

will reduce by $$3$ per unit. However, this automation would increase fixed expenses by $$54,000$ each month.

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

b$.$ Assume that the company expects to sell $20,400$ 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.$)$

c$.$ Would you recommend that the company automate its operations $($Assuming that the company expects to sell $20,400$ units$)?$

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

Req $1$

Req $3$

Compute the company's break$-$even point in unit sales and dollar sales. $($Do not round intermediate calculations.$).$

reak$-$even point in unit sales

reak$-$even point in dollar sales

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