5B Req 1Reg 2Reg 3Req 4Req 5AReq 5BReq 5CRefer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenseswould increase by $53,000 each month. Assume that the company expects to sell 20,900 units next month. Prepare twocontribution format income statements, one assuming that operations are not automated and one assuming that they are. (Showdata on a per unit and percentage basis, as well as in total, for each alternative.) (Do not round your intermediate calculations.Round your percentage answers to the nearest whole number.)Show less APEM, IncorporatedContribution Income StatementNot AutomatedAutomatedPerPerTotal%Total%UnitUnitSales$ 627,000 S30✔100 $ 627,000 $ 30376,20060313,50015Variable expensesContribution margin18✔12250,800 S40313,500$15Fixed expenses169,200Net operating income81,600s< Req 5A$18,600 X294,900Req 5C >1005050 Due to erratic sales of its sole product-a high-capacity battery for laptop computers-PEM, Incorporated, has been experiencingfinancial difficulty for some time. The company's contribution format income statement for the most recent month is given below:Sales (12,600 units × $30 per unit)Variable expensesContribution marginFixed expenses$ 378,000226,800151,200169,200Net 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 salesstaff, will increase unit sales and the total sales by $82,000 per month. If the president is right, what will be the increase (decrease) inthe 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 budget, will double unit sales. If the sales manager is right, what will be the revised net operatingincome (loss)?4. Refer to the original data. The Marketing Department thinks that a fancy new package for the laptop computer battery would growsales. The new package would increase packaging costs by $0.70 per unit. Assuming no other changes, how many units would haveto be sold each month to attain a target profit of $4,400?5. Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenseswould increase by $53,000 each month.a. Compute the new CM ratio and the new break-even point in unit sales and dollar sales.b. Assume that the company expects to sell 20,900 units next month. Prepare two contribution format income statements, oneassuming that operations are not automated and one assuming that they are. (Show data on a per unit and percentage basis, aswell as in total, for each alternative.)c. Would you recommend that the company automate its operations (Assuming that the company expects to sell 20,900 units)?

"Since you have specifically asked to answer Part 5B, we will solve that particular part for you. To…

Req 1 Req 2 Req 3 Reg 4 Reg 5A Reg 5B Req 5C Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $53,000 each month. Assume that the company expects to sell 20,900 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.) (Do not round your intermediate calculations. Round your percentage answers to the nearest whole number.) Show less A PEM, Incorporated Contribution Income Statement Not Automated Automated Per Total % Per Unit % Unit Sales $ 627,000 $ 30 15 Variable expenses Contribution margin $ 15 Fixed expenses Net operating income s 30 18✔ 12 < Req 5A S 376,200 250,800 S 169,200 81,600 100 60 40 $ $ Total 627,000 313,500 313,500 18,600 X 294,900 Req 5C > 100 50 50

Req 1 Req 2 Req 3 Reg 4 Reg 5A Reg 5B Req 5C Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $53,000 each month. Assume that the company expects to sell 20,900 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.) (Do not round your intermediate calculations. Round your percentage answers to the nearest whole number.) Show less A PEM, Incorporated Contribution Income Statement Not Automated Automated Per Total % Per Unit % Unit Sales $ 627,000 $ 30 15 Variable expenses Contribution margin $ 15 Fixed expenses Net operating income s 30 18✔ 12 < Req 5A S 376,200 250,800 S 169,200 81,600 100 60 40 $ $ Total 627,000 313,500 313,500 18,600 X 294,900 Req 5C > 100 50 50

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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