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Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $80 per unit. Variable expenses are $40.00 per unit, and fixed expenses total $200,000

Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $80 per unit. Variable expenses are $40.00 per unit, and fixed expenses total $200,000 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 $55,000 during the next year. By how much should net operating income increase (or net loss decrease) assuming that fixed expenses do not change?

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b.

The president expects sales to increase by 12% next year. By what percentage should net operating income increase? (Round intermediate calculations and final answer to 2 decimal places.)

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4. Assume that the operating results for last year were: Sales Variable expenses Contribution margin 1,920,000 960,000 960,000 Fixed expenses 200,000 Net operating income $760,000 a. Compute the degree of operating leverage at the current level of sales. (Round your answer to 2 decimal places.) Degree of operating leverage

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