4. Assume that the operating results for last year were: Sales Variable expenses $1,080,000 540,000 Contribution margin Fixed expenses 540,000 180,000 Net operating income $360,000 a. Compute the degree of operating leverage at the current level of sales. (Round your answer to 2 decimal places.) Degree of operating leverage 1.50 b. The president expects sales to increase by 20% next year. By what percentage should net operating income increase? (Round intermediate calculations to 2 decimal places and final percentage answer to 2 decimal places, i.e. 22.47%) Net operating income increases by 30.00: % 5. Refer to the original data. Assume that the company sold 28,500 units last year. The sales manager is convinced that a 11% reduction in the selling price, combined with a $64,000 increase in advertising, would increase annual unit sales by 5 a. Prepare two contribution format income statements, one showing the results of last year's operations and one showing the results of operations if these changes are made. (Do not round intermediate calculations. Round your "Per unit" answers to 2 decimal places.) Feather Friends, Inc., Contribution Income Statement Last Year Proposed 28,500 units units Total Per Unit Total Per Unit 0 0.00 0 0.00 0 b. Would you recommend that the company do as the sales manager suggests? Yes 6. Refer to the original data. Assume again that the company sold 28,500 units last year. The president does not want to change the selling price. Instead, he wants to increase the sales commission by $2.40 per unit. He thinks that this move, combined with some increase in advertising, would double annual unit sales. By how much could advertising be increased with profits remaining unchanged? Do not prepare an income statement, use the incremental analysis approach. The amount by which advertising can be increased is