Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $120 per unit. Variable expenses are $60.00 per unit, and fixed expenses total $160,000 per year.

Required:
Answer the following independent questions:
1.	What is the product's CM ratio?

2.	Use the CM ratio to determine the break-even point in dollar sales.

3.	Due to an increase in demand, the company estimates that sales will increase by $43,000 during the next year. By how much should net operating income increase (or net loss decrease) assuming that fixed expenses do not change?

4.

Assume that the operating results for last year were:

Sales	$	3,120,000
Variable expenses		1,560,000
Contribution margin		1,560,000
Fixed expenses		160,000
Net operating income	$	1,400,000

a.	Compute the degree of operating leverage at the current level of sales. (Round your answer to 2 decimal places.)

b.	The president expects sales to increase by 14% next year. By what percentage should net operating income increase? (Round intermediate calculations to 2 decimal places and final percentage answer to 2 decimal places, i.e. 22.47%)

1. What is the product's CM ratio? CM ratio 2. Use the CM ratio to determine the break-even point in dollar sales. -even point es dolla 3. Due to an increase in demand, the company estimates that sales wil increase by S43,000 during the next year. By how much should net operating income increase (or net loss decrease) assuming that fixed expenses do not change? et opera 4. Assume that the operating results for last year were 3,120,000 Sales 560,000 Variable expenses 560,000 Contribution margin Fixed expenses 160,000 1,400,000 Net operating income a Compute the degree of operating leverage at the current level of sales. (Round your answer to 2 decimal places.) egree erag b he president expects sales to increase by 14% next year. By what percentage should net operating income increase? (Round intermediate calculations to 2 decimal places and final percentage answer to 2 decimal places. e. 22.47%) et opera