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. Its operating results for last year were as follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 1,080,000 540,000 540,000 200,000 $ 340,000 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 53,000 units and $2.120,000, 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-b. Assume the president expects this year's unit sales to increase by 14%. 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 $75,000 increase in advertising, would Increase this vers unit cales hw 25% YOU CILCHILGYCHLICOSCHICLOPCIOLI HILUHIE WII UIC LUNCHLE us you 5. The sales manager is convinced that a 14% reduction in the selling price, combined with a $75,000 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 wil net operating income increase or decrease over last year? 6. The president does not want to change the selling price. Instead, he wants to increase the sales commission by $200 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 $340,000 net operating income as last year? Complete this question by entering your answers in the tabs below. Reg 3 Reg1 Red SA Reg 6 Reg 23 Reg 4 Reg 40 Reg 58 Use the CM ratio to determine the break-even point in dollar sales. (Do not round Intermediate calculations.) Break-even point in dollar sales Reg 1 Reg 3 > 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 $340,000 net operating income as last year? Complete this question by entering your answers in the tabs below. Reg 2 Reg 3 Reg 1 Reg 4 Rlq 48 Reg SA Reg 5B Reg 6 Assume the president expects this year's unit sales to increase by 14%. Using the degree of operating leverage from last year, what percentage increase in net operating income will the company realize this year? (Round intermediate calculations and final answer to 2 decimal places.) No operating income increases by % UK Reg A7 Rog 113 5. The sales manager is convinced that a 14% reduction in the selling price, combined with a $75,000 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 increase the sales commission by $2.00 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 $340,000 net operating income as last year? Complete this question by entering your answers in the tabs below. es Reg 1 Reg 6 Reg 2 Reg 3 Reg 4 Reg 58 Reg 4B Reg SA The sales manager is convinced that a 14% reduction in the selling price, combined with a $75,000 increase in advertising, would increase this year's unit sales by 25%. If the sales manager is right, what would be this year's net operating income if his ideas are implemented? (Do not round Intermediate calculations.) Net operating income lossy Req 46 Reg 58 11 The sales manager is convinced that a 14% reduction in the selling price, combined with a $75,000 increase in advertising, would ncrease 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 wil net operating income increase or decrease over last year? 6. The president does not want to change the selling price. Instead, he wants to increase the sales commission by $2.00 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 $340,000 net operating income as last year? Complete this question by entering your answers in the tabs below. Reg 6 ReSB Reg 2 Reg 1 Reg 3 Req 4B Reg SA Reg 4 The sales manager is convinced that a 14% reduction in the selling price, combined with a $75,000 increase in advertising, would increase this year's unit sales by 25%. If the sales manager's ideas are implemented, how much will net operating income increase or decrease over last year? (Negative amounts should be input with a minus sign.) Increase (decreaso) to net operating income Req5A Reg 6 , 5 ye 5. The sales manager is convinced that a 14% reduction in the selling price, combined with a $75,000 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 increase the sales commission by $2.00 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 $340,000 net operating income as last year? Complete this question by entering your answers in the tabs below. RODEO Reg 1 Reg 3 Reg 2 Reg 4A Reg SA Reg 48 Reg 5B The president does not want to change the selling price. Instead, he wants to increase the sales commission by $2.00 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 $340,000 net operating income as last year? (Do not round Intermediate calculations.) Show less The amount by which advising tan be inceaned Prev 10 of 11 !!! Next >