5. Assume that sales increase by $600,000 next year. If cost behaviour patterns remain unchanged, by how much will the company's operating income increase? Use the CM ratio to determine your answer. [3 marks) Refer to the original data to answer Question 6. 6. Assume that next year, management wants the company to earn minimum profit of $500,000. How many units will have to be sold to meet this target profit figure? (3 marks) Refer to the original data to answer Questions 7 and 8. 7. Compute the company's margin of safety in dollars. (3 marks) 8. Compute the company's margin of safety in percentage form. (3 marks) Refer to the original data to answer Questions 9 to 11. 9. Compute the company's degree of operating leverage at the current level of sales. (3 marks) 10. Assume that through a more intense effort by the sales staff, the company's sales will increase by 12% next year. By what percentage would you expect operating Income to increase? Use the operating leverage concept to obtain your answer. (3 marks) 11. Compute the company's new sales in units. 3 marks) Use the information below to answer Questions 12 through 14. In an effort to increase sales and profits, management is considering using a higher-quality microprocessor in the router. The higher-quality microprocessor would increase variable costs by $8 per unit, but management could eliminate one quality inspector, who is paid a salary of $40,000 per year. The sales manager estimates that the higher-quality microprocessor would increase annual sales by at least 10% 12. Compute the company's new break-even point in units of sales. Smarles 13. Compute the company's new break-even point in dollars of sales. G marks), 14. Would you recommend that the changes be made? Why or why not? (4 marks Networks Company manufactures wireless routers. The company's contribution format income statement for the most recent year is given below: Total Per Unit Percentage of Sales Total Per Unit Percentage of Sales Sales (25,000 units)........... Less variable expenses $2,500,000 1,500,000 $100 60 100% ? % BRE $40 $.40 7% Contribution margin...... Less fixed expenses. Operating income.... 1,000,000 800,000 $ 200,000 Management believes operating income can be further improved and would like you to prepare the following analysis