Solution-How to compute the new cm ratio and the new

How to compute the new cm ratio and the new break-even point

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Reference no: EM132565301

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 (12,700 units × $20 per unit) $ 254,000

Variable expenses 152,400

Contribution margin 101,600

Fixed expenses 113,600

Net operating loss $ (12,000 )

Problem 1: Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $56,000 each month. Compute the new CM ratio and the new break-even point in unit sales and dollar sales. (Do not round intermediate calculations. Round "CM ratio" to the nearest whole percentage (i.e., 0.234 should be entered as "23") and other answers to the nearest whole number.)

a. CM ratio = %

b. Break-even point in unit sales =

c. Break-even point in dollar sales =

Reference no: EM132565301

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How to compute the new cm ratio and the new break-even point

Reference no: EM132565301

Reference no: EM132565301

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