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 (12,600 units x $40 per unit) - $504,000Variable expenses - 252,000Contribution margin - 252,000Fixed expenses - 282,000Net operating loss - $(30,000)1. Compute the company's CM ration and its break-even point in both 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 result in an $85,000 increase in monthly sales. If the president is right, what will be the effect on the company's monthly net operating income or loss? (Use the incremental approach in preparing your answer).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. What will the new contribution format income statement look like if these changes are adopted?