Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $120 per unit. Variable expenses are $60.00 per unt, and fixed expenses total $160,000 per year its operating results for last year were as follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 3,350,000 1,680,000 1,680,000 160,000 $1,520,000 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. If this year's sales increase by $59,000 and fixed expenses do not change, how much will net operating income increase 40. What is the degree of operating leverage based on tost year's sales? 4-b. Assume the president expects this year's sales to increase by 12. Using the degree of operating leverage from last year, what percentage increase in net operating income will the company reuze this year? 5. The sales manager is convinced that a 13% reduction in the selling price.combined with a $69,000 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 this 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 $150 per unit. He thinks that this move, combined with some increase in advertising, would increase this year's sales by 25% How much could the president increase this year's advertising expense and still earn the same $1520.000 net operating income as last year? Complete this question by entering your answers in the tabs below. RA SA RAISA RA Ren3 RAI 4A Ren 2 Ren 1 Next Next

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Investing Amid Low Expected Returns Making The Most When Markets Offer The Least

Authors: Antti Ilmanen

1st Edition

1119860199, 978-1119860198

More Books

Students also viewed these Accounting questions

Question

How do certain genetic conditions affect motor control?

Answered: 1 week ago