Question - Due to erratic sales of its sole product-a high-capacity battery for laptop computers-PEM, Inc., has been experiencing difficulty for some time. The company's contribution format income statement for the most recent month is given below:
Sales (19,500 units at $30 per unit) $585,000
Variable expenses 409,500
Contribution margin 175,500
Fixed expenses 180,000
Net operating loss $(4,500)
Requirement - Compute the company's CM ratio and its break-even point in both units and dollars.