Check nm re $40.00 per unit, Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $80 per unit. Variable expenses a and fixed expenses total $160,000 per year. Its operating results for last year were as follows: Sales Variable expenses Contribution margin- 080.000 $ 2,160,000 1,080,000 160,000 Fixed expenses Net operating income 920,000 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. If this year's sales increase by $49,000 and fixed 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? 4-b. Assume the president expects this year's sales to increase by 14%. 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 13% reduction in the selling price, combined with a $74,000 increase in advertising, would increase this year's unit sales by 5%. a. If the sales manager is right, what would be this year's net operating income if his ideas are implemented? b. Do you recommend implementing the sales manager's suggestions? K Prex 4 of 5 Next