Assignment#2 Voltar Company manufactures and sells a specialized cordless telephone for high electromagnetic radiation environments. The company's contribution format income statement for the most recent year is given below: Per Unit Total Sales (20,000 units) ...... . $1,200,000 Variable expenses ... 900,000 Contribution margin. 300,000 Fixed expenses ......... . 240,000 Net operating income..........$ 60,000 Percent of Sales 100% $60 45 ...w $15 7% Management is anxious to increase the company's profit and has asked for an analysis of a number of items. Required: 1. Compute the company's degree of operating leverage at the present level of sales. 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 of operating leverage in part 1 to obtain your answer 3. Verify your answer to (b) by preparing a new contribution format income statement showing an 8% increase in sales. In an effort to increase sales and profits, management is considering the use of a higher- quality speaker. The higher-quality speaker would increase variable costs by $3 per unit, but management could eliminate one quality inspector who is paid a salary of $30,000 per year. The sales manager estimates that the higher quality speaker would increase annual sales by at least 20%. 1. Assuming that changes are made as described above, prepare a projected contribution format income statement for next year. Show data on a total, per unit, and percentage basis. 2. Compute the company's new break-even point in both units and dollars of sales. Use the formula method. 3. Would you recommend that the changes be made