College Hoois Community Cu Launch Meeting-Zoom Holyoke Community College) Halycia Community C... EXAM 2 Online KinGpin Company manufactures and sells a specialized cordless earbuds. The company's contribution format income statement for the most recent year is given below: Sales (40,000 Units @ $50 per unit) $2,000,000 Variable Expenses ($30 per unit) Fixed Expenses 1,200,000 500,000 REQUIRED: 1. Compute the company's CM ratio and variable expense ratio. 2. Compute the company's break-even point in both unit sales and dollar sales. 3. Assume that next year management wants the company to earn a profit of at least $540,000. How many units will have to be sold to meet this target profit? 4. Refer to the original data. Compute the company's margin of safety in both dollar and percentage form. 5. Compute the company's degree of operating leverage at the present level of sales. 6. 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 to obtain your answer. 7. In an effort to increase sales and profits, management is considering the use of a higher-quality garbud. The higher-quality garbud would increase variable costs by $5 per unit, but management could eliminate one worker who is paid a salary of $60,000 per year. The sales manager estimates that the higher-quality carbud would increase annual sales by at least 15% 20 20 22 000 MacBook Air