Due to erratic sales of its sole product�a high-capacity battery for.docx

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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: 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 $84,000 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 $38,000 in the monthly advertising budget, will double unit sales. If the sales manager is right, what will be the revised net operating income (loss)? 4. Refer to the original data. The Marketing Department thinks that a fancy new package for the laptop computer
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