56 dit View History Bookmarks Window Help 3 toeducation.com o 5. Alandet BAG WFA?? Manag Me 11. Chapter 2 Five - HW Help Save & Ex Submit Check my work 1 Feather Friends, Incorporated, distributes a high quality wooden biedhouse that sells for $20 per unit. Variable expenses are $8 per unit, and fixed expenses total $180,000 per year. Its operating results for last year were as follows Sales $400,000 Variable expenses 160.000 Contribution margin 240,000 Fixed expenses 188,000 Net operating income $ 60,000 Required: Answer each question independently based on the original data 1 What is the product's CM ratio? 2 Use the CM ratio to determine the break-even point in dollar sales 3. Assume this year's unit sales and total sales increase by 3.350 units and $75,000, respectively. If the fired expenses do not change how much will net operating income increase? 4-aWhat is the degree of operating leverage based on last year's sales? 46. Assume the president expects this year's unit sales to increase by 20%. Using the degree of operating leverage from last year what percentage increase in net operating income will the company realize this year? S. The sales manager is convinced that a 10% reduction in the selling price.combined with a $30.000 increase in advertising, would increase this year's unit sales by 25% a. If the sales manager is right, what would be this year's net operating income this ideas are implemented? b. If the sales managers idees are implemented, how much wil net operating come increase or decrease over tast year? 6. The president does not want to change the selling price. Instead, he wants to increase the sales commission by St per unit. He thinks that this move.combined with some increase in advertising, would increase this year's unit sales by 25% How much could the president increase this year's advertising expense and still earn the same 560.000 net operating income as last year? Complete this question by entering your answers in the tabs below Prev w 11 11 !!! Next av MacBook Pro The Brittany *** ! 1 % 5 @ 2 A 6 & 7 II -0 8 3 4 W Q E R T Y U I 0 A S D F . G .. J 1 View History Bookmarks Window Help ve - HW Mother mi Help Save & Eat Submit Check my won Feather Friends, Incorporated, distributes a high quality wooden birdhouse that sells for $20 per unit Variable expenses are 58 per unit and fored expenses total $180,000 per year. Its operating results for last year were as follows: Sales $400.00 Variable expenses 160,000 Contribution margin 24.ee Fbxed expenses Net operating income $ 60,000 Required: Answer each question independently based on the original data 1. What is the product's CM ratio? 2. Use the CM ratio to determine the break even point in dollar sales 3. Assume this year's unit sales and total sales increase by 3750 units and $75,000, respectively the fed expenses do not change how much will net operating income increase? 4-a. What is the degree of operating leverage based on last year's sales! 46. Assume the president expects this year's unt sales to increase by 20%. Using the degree of operating leverage from last year what percentage increase in net operating income will the company realize this year? 5. The sales manager is convinced that a 10% reduction in the selling price, combined with a $30,000 increase in advertising, would increase this year's unit sales by 25% a. If the sales manager is right what would be this year's net operating income this ideas are implimented? b. If the sales manager's ideas are implemented, how much will net operating income increase or decrease over last year? 6. The president does not want to change the selling price. Instead, he wants to increase the sales commission by St per unit. He thinks that this move.combined with some increase in advertising would increase this year's unt sales by 25% How much could the president increase this year's advertising expense and still earn the same $60,000 net operating income as last year? Complete this question by entering your answers in the tabs below. *855000" 6 2 3 $ 4 % 5 6 & 7 W. C 9 0 W E R Y U O P S D F G H J L