4. Assume that the operating results for last year were as follows: Sales 5 333,303 Less: Variable expenses 243,363 Contribution margin 553,303 Less: Fixed expenses 423,303 Net operating income 5 143.1309 4:. Compute the degree of operating leverage at the current level of sales- [Round your answer to 1 decimal piece.) b. The president expects sales to increase by 20% next year. By how much should net operating income increase? \f1 Calculate Klyne Corporation's breakeven point in sales dollars for the year 2020 if the company had hired its own sales force to replace the network of agents- {Round your answer to 2 decimal places.) _:| 3. Calculate the degree of operating leverage at sales of $26,500,000, considering {a} Kiyne uses sales agents and [b] Klyne employs its own staff. Describe the advantages and disadvantages of each alternative. {Round your answers to 2 decimal places.) Using sales agent Employing own sales staff 3. Calculate the change in profit if the selling price were reduced by $8.50 each and annual sales were to increase by 6,800 units. 4. Determine the change in profit if the company were to increase advertising by $109,000 and if this were to increase sales by 6,800 units.Memofax, Inc. produces memory enhancement software for computers. Sales have been very erratic, with some months showing a prot and some months showing a loss. The company's contribution format income statement for the most recent month is given below: sales (18,566 units) $ 748,300 Less: Variable expenses 513,333 Contribution margin 222,800 Less: Fixed expenses 231.333 Net operating loss 5 (91333) Required: 1. Compute the company's CM ratio and its breakeven point in both units and dollars. {Do not round intermediate calculations. Round you: "Break-even point in units\" answer up to nearest whole numberz} Contribution margin ratio Breakeven point in units Breakeven point in dollars 9. The sales manager feels that an $21,000 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in a $135,000 increase in monthly sales. If the sales manager 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 president is convinced that a 9% reduction in the selling price, combined with an increase of $75,000 in the monthly advertising budget, will double unit sales. Should the company make these changes? 0 Yes 0 N0 4. Refer to the original data. The company's advertising agency thinks that a new package would help sales. The new package being proposed would increase packaging costs by $0.5 per unit. Assuming no other changes, how many units would have to be sold each month to earn a prot of $5,800? [Do not round intermediate calculations. Round your answer up to nearest whole number.} 5. Refer to the original data. By automating, the company could slash its variable expenses in half. However, xed costs would increase by $83,600 per month. a. Compute the new CM ratio and the new breakeven point in both units and dollars. {Do not round intermediate calculations. Round your "Contribution margin ratio'l answer to 2 decimal places. Round your "Break-even point" answers up to nearest whole number.) Contribution margin ratio Break-even point in units Break-even point in dollars b. Assume that the company expects to selt 25,000 units next month. Prepare two contribution format income statements: one assuming that operations are not automated, and one assuming that they are. {Do n01. round intermediate calculations. Round "Per Unitll and "Percentage\" to 2 decimal pieces.) c. This part of the question is not part of your Connect assignmenL d. What is the point of indifference between the two options? [Do not round intermediate calculations. Round your answer up to nearest whole number.) _ um 4. If Klyne increases the commission paid to its sales staff to 15%, keeping all other costs the same, how much revenue {in dollars} would Klyne have to generate to earn the same operating income it did in 2020? {Round your answer to 2 decimal places.) :| Stratford Company distributes a lightweight lawn chair that sells for $20 per unit. Variable expenses are 30% of sales, and xed expenses total $420,000 annually. Required: Answer the following independent questions: 1. What is the product's CM per unit? 1 Use the CM per unit to determine the brealeeven point in units. 3. The company estimates that sales will increase by $105,000 during the coming year due to increased demand. By how much should net operating income increase? L Assume that the operating results for last year were as follows: Sales 5 868,363 Less: Variable expenses 243.303 Contribution margin 568,609 Less: Fixed expenses 428,866 Net operating income $ 148,603 5-a. Refer to the original data. Assume that the company sold 42,000 units last year. The sales manager is convinced that a 2% reduction in the selling price, combined with a $152,000 increase in advertising expenditures, would increase annual unit sales by 30%. Prepare two contribution format income statements: one showing the results of last year's operations, and one showing what the results of operations would be ifthese changes were made. {Do not round intermediate calculations. Round \"Per Unit\" answers to 2 decimal places} 5-b. Would you recommend that the company do as the sales manager suggests? O Yes 0 No 6. Refer to the original data. Assume again that the company sold 42,000 units last year. The president feels that it would be unwise to change the selling price. Instead, she wants to increase the sales commission by $2 per unit. She thinks that this move, combined with some increase in advertising, would double annual unit sales. By how much could advertising be increased with prots remaining unchanged? Do not prepare an income statement; use the incremental analysis approach. The Central Valley Company is a manufacturing rm that produces and sells a single product. The company's revenues and expenses for the last four months are given below. Central valley Company Comparative Incoe Statement March April He}: June Sales in units 5, 988 5,488 6,688 Tr', 888 Sales revenue 5 TIM-3,488 5 638,488 $ 331,588 $ 932,888 Less: Cost of goods sold 384, 858 363,416 432,432 581, 228 Gross margin $ 3&8, 558 $ 312, 934 $ 399, 168 $ 431, 5?2 Less: Operating expenses Shipping expense $ 53,388 $ 54, 288 $ 66,888 $ 66, 588 Advertising expense 83,588 33,588 83,588 83, 588 Salaries and commissions 153, 588 138, 588 166,888 1?6, 888 Insurance expense 13,588 13,588 13,588 13,588 Amortization expense 46, 588 46, 588 4-6, 588 46, 588 Total operating expenses 5 378,388 5 336, 288 $ 336,388 $ 386,888 Net income $ (21,753) $ {23,216} $ 22, ass 3; 95, 5D [ Required: 1. Management is concerned about the losses experienced during the spring and would like to know more about the cost behaviour. Develop a cost equation for each of the costs. {Do not round intermediate calculations. Round "Per Unit" answers to 2 decimal places.) Required: 1. Management is concerned about the losses experienced during the spring and would like to know more about the cost behaviour. Develop a cost equation for each of the costs. {Do not round intermediate calculations. Round 1"'Per Unit" answers to 2 decimal places]: Cost of goods sold Salaries 3. commission 1". Assume that xed costs are incurred uniformly throughout the year. Compute the annual breakeven sales, and the prot if 75,000 units are sold during the year. {Round \"Break-even sales'I answer to nearest whole number.} Break-even sales Annual prot (75,000 units)