Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $40 per unit. Variable expenses are $20.00 per unit, and fixed expenses total $200,000 per year.

1. What is the product's CM ratio?

CM ratio

%

2.

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

Break-even point in sales dollars

3.

Due to an increase in demand, the company estimates that sales will increase by $45,000 during the next year. By how much should net operating income increase (or net loss decrease) assuming that fixed expenses do not change?

Net operating income

by