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 $180,000 per year. Its operating results for last year were as follows: Sales Variable expenses Contribution margin Fixed expenses Het operating Income $ 3, 120,000 1.560,000 1,560,000 180.000 51,380,000 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. Assume this year's unit sales and total sales increase by 50,000 units and $6,000,000, respectively. If the 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? 4-6. Assume the president expects this year's unit sales to increase by 16%. 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 14% reduction in the selling price, combined with a $73,000 increase in advertising, would increase this year's unit sales by 25%. a. If the sales manager is right, what would be this year's net operating income if his ideas are implemented? b. If the sales manager's ideas are implemented, how much will net operating income increase or decrease over last year? 6. The president does not want to change the selling price. Instead, he wants to crease the sales commission by $2.20 per unit. He thinks that this move. combined with some increase in advertising, would increase this year's unit sales by 25%. How much could the president increase this year's advertising expense and still earn the same $1,380,000 net operating income as last year? A company selstwo products-J and K. The sales mix is expected to be 53 of sales of Product K for every St of sales of Product Product hos o contribution margin ratio of 40% whereas Product has a contribution margin ratio of 50%, Annual fixed expenses are expected to be $120,000. The overall break even point for the company in dollar sales is expected to be closest to Multiple Choice $196,000 $200,000 $252,632 $263.420