144 (173 01 65 144 (173 of 657 ss telephone for high electromagnetic radia ion e s. The c Percent of Sales 100% Total Per Unit $1,200,000 $60 45 Sales (20,000 units) Variable expenses Contribution margin Fixed expenses Net operating income 900,000 300,000 $15 7% 240,000 $60,000 Management is anxious to increase the company's profit and has asked for an analysis of a number of items Compute the company's CM ratio and variable expense ratio. Compute the company's break-even point in both units and sales dollars. Use the equation method. Assume that sales increase by $400.000 next year. If cost behavior patterns remain unchanged, by how much will the company's net operating income increase? Use the CM ratio to compute your answer 1. 2. 3. 4. Refer to the original data. Assume that next year management wants the company to earn a profit of at 5 Refer to the original data. Compute the company's margin of safety in both dollar and percentage 6. a Compute the company s degree of operating leverage at the present level of sales. least $90,000. How many units will have to be sold to meet this target profit? orm. Assume that through a more intense effort by the sales staff, the company's sales increase by 8% next year. By what percentage would you expect net operating income to increase? Use the degree ting leverage to obtain your answer Verify your answer to (b) by preparing a new contribution format income statement showing