Complete in Excel and use cell references. There is no template. You must enter all of the original data. Mercer Company manufactures and sells cordless phones. The contribution format income statement for the most recent year is below: Sales (20,000 units) Variable expenses Contribution margin Total $1,200,000 900,000 300,000 240,000 Fixed expenses Net operating income $ 60,000 Per Unit $60 45 $15 Percent of Sales 100% ? ? Management is anxious to increase the company's profit and has asked for an analysis of a number of items. 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. Use the equation method. 3. Assume the sales increase by $400,000 next year. If cost behavior patterns remain unchanged, by how much will the company's net operating income increase? Use the CM ratio to compute your answer. 4. Refer to the original data. Assume that next year management wants the company to earn a profit of at least $90,000. How many units will have to be sold to meet this target profit? 5. Refer to the original data. Compute the company's margin of safety in both dollar and percentage form. 6. a. Compute the company's degree of operating leverage at the present level of sales. b. 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 degree of operating leverage to obtain your answer. c. Verify your answer to (b) by preparing a new contribution format income statement showing the 8% increase in sales. 7. In an effort to increase sales and profits, management is considering the use of a higher-quality speaker. The higher quality would increase variable costs by $3 er unit, but would eliminate one inspector who is paid $30,000 per year. The sales manager estimates the new speaker would increase annual sales by 20%. a. Assume 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. b. Compute the company's new break-even point in both unit sales and dollar sales. Use the formula method. c. Would you recommend the changes be made?