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: Sales (13,000 units × $20 per unit) $ 260,000 Variable expenses 156,000 Contribution margin 104,000 Fixed expenses 116,000 Net operating loss $ (12,000) The sales manager is convinced that a 10% reduction in the selling
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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:
| Sales (13,000 units × $20 per unit) | $ 260,000 |
|---|---|
| Variable expenses | 156,000 |
| Contribution margin | 104,000 |
| Fixed expenses | 116,000 |
| Net operating loss | $ (12,000) |
The sales manager is convinced that a 10% reduction in the selling price, combined with an increase of $33,000 in the monthly advertising budget, will double unit sales. If the sales manager is right, what will be the revised net operating income (loss)?
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- Due to erratic sales of its sole product, a high capacity battery for laptop computers, elo Company has been experiencing difficulty for some time. The company's income statement for the most recent month is given below: Sales (19,500 units @ P500) P9,750,000 Less variable expenses (7.995.000) Contribution margin 1,755,000 Less fixed expenses 1,800,000 Net loss P (45,000) The sales manager is convinced that a 5% reduction in the selling price, combined with an increase of P600,000 in the monthly advertising budget, will cause unit sales to double. What will be the new profit or loss if these changes are adopted?Due to erratic sales of its sole product—a high-capacity battery for laptop computers—PEM, Inc., has been experiencing financial difficulty for some time. The company’s contribution format income statement for the most recent month is given below: Sales (13,100 units × $20 per unit) $ 262,000 Variable expenses 157,200 Contribution margin 104,800 Fixed expenses 116,800 Net operating loss $ (12,000 ) 2. The president believes that a $6,200 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an $83,000 increase in monthly sales. 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 $33,000 in the monthly advertising budget, will double unit sales. If the sales manager is right, what will be the…Due to erratic sales of its sole product—a high-capacity battery for laptop computers—TECH, Inc., has been experiencing financial difficulty for some time. The company’s contribution format income statement for the most recent month is given below:Sales (12,700 units × $30 per unit) $ 381,000Variable expenses 190,500Contribution margin 190,500Fixed expenses 213,000Net operating loss $ (22,500 )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 $6,100 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an $85,000 increase in monthly sales. 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 $36,000 in the monthly advertising budget, will double unit…
- Due to erratic sales of its sole product, a high capacity battery for laptop computers, Salcedo Company has been experiencing difficulty for some time. The company's income statement for the most recent month is given below: Sales (19,500 units @ P500) P9,750,000 Less variable expenses (7,995,000) Contribution margin 1,755,000 Less fixed expenses 1,800,000 Net loss P (45,000) By automating certain operations, the company could reduce variable costs by P30 per unit. However, fixed costs would increase by P9600,000 each month. How would the breakeven point in units change if the company automated the operations?Due to erratic sales of its sole product—a high-capacity battery for laptop computers—PEM, Inc., has been experiencing financial difficulty for some time. The company’s contribution format income statement for the most recent month is given below: Sales (12,600 units × $20 per unit) $ 252,000 Variable expenses 151,200 Contribution margin 100,800 Fixed expenses 112,800 Net operating loss $ (12,000 ) b. Assume that the company expects to sell 20,200 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 20,200 units)?Due to erratic sales of its sole product - a high-capacity battery for laptop computers - PEN, Inc., has been experiencing financial difficulty for some time. The company's contribution format income statement for the most recent month is given below: Sales (19,500 units x $30 per unit) $585,000 Variable expenses 409,500 Contribution margin $175,500 Fixed expenses 180,000 Net operating loss <$4,500> Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $72,000 each month. a) Compute the new CM ratio and the new break-even point in unit sales and dollar sales. b) Assume the the company expects to sell 26,000 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…
- 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: Sales (13,000 units x $30 per unit) Variable expenses Contribution margin Fixed expenses Net operating loss $ 390,000 195,000 195,000 217,500 $ (22,500)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: Sales (12,600 units x $30 per unit) Variable expenses $ 378,000 226,800 151,280 169, 280 Contribution margin Fixed expenses Net operating loss $ (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 $82,000 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 $39,000 in the monthly advertising…I need answers to question 4 and 5: 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: Sales (13,400 units × $30 per unit) $ 402,000 Variable expenses 201,000 Contribution margin 201,000 Fixed expenses 223,500 Net operating loss $ (22,500) 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 $6,400 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will increase unit sales and the total sales by $85,000 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…
- 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: Sales (13,400 units × $30 per unit) $ 402,000 Variable expenses 201,000 Contribution margin 201,000 Fixed expenses 223,500 Net operating loss $ (22,500) 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 $6,400 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will increase unit sales and the total sales by $85,000 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 $39,000 in the…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: Sales (13,500 units × $20 per unit) $ 270,000 Variable expenses 162,000 Contribution margin 108,000 Fixed expenses 120,000 Net operating loss $ (12,000) 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 $6,100 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will increase unit sales and the total sales by $85,000 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 $30,000 in the…Due to erratic sales of its sole product-a high-capacity battery for laptop computers-PEM, Inc., has been experiencing financial difficulty for some time. The company's contribution format income statement for the most recent month is given below: Sales (12,500 units × $20 per unit) Variable expenses Contribution margin Fixed expenses Net operating loss $ 250,000 150,000 100,000 112,000 $ (12,000) 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 $6,800 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an $87,000 increase in monthly sales. 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 $31,000 in the monthly advertising budget, will double unit…
