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 Net operating income $3,240,000 1,620,000 1,620,000 180,000 $1,440,000 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 doilor sales 3. Assume this year's unit sales and total sales increase by 60,000 units and $7,200,000, 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 tost year's sales? 4.b. Assume the president expects this year's unit sales to increase by 17%. 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 15% reduction in the selling price, combined with a $77,000 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 $1.70 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 $1.440,000 net operating income as last year? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Req 4A Reg 48 Reg 5A Reg SB Reg 6 What is the product's CM ratio? CM ratio 5. The sales manager is convinced that a 15% reduction in the selling price, combined with a $77,000 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 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 $170 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 $1,440,000 net operating income as last year? Complete this question by entering your answers in the tabs below. Reg 48 Reg 5 Reg 58 Reg! Real Rea 1 Reg 4 Rego Use the CM ratio to determine the break-even point in dollar sales (Do not round intermediate calculations.) Break-even point in dolares R14 2 > BO 2 $ 4 & 7 5 G 9 3 0 6 on R U { 0 F G H J L . T command option Check my work 4-0. Assume une present expects this year's urut sales to increase by using the degree or 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 15% reduction in the selling price, combined with a $77,000 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 $170 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 $1,440,000 net operating income as last year? Complete this question by entering your answers in the tabs below. Reg1 R2 Rea Reg Re45 RAG SA Reg 58 Reg 6 Assume this year's unit sales and total sales increase by 60,000 units and 57,200,000, respectively. If the foved expenses do not change, how much wil net operating income increase? (Do not round Intermediate calculations) Net Operating income BO os DW DO $ 4 { 5 6 & 7 8 ) 0 9 R T Y U I 0 { ) F G I J L V B N MacBook Air 3: DO 20 $ A 4 5 6 ) 7 00 9 O = R T Y U 1 O P { [ F G H J K L V D Check my wo 40. Assume the president expects this years unt sales to increase by using the oegree of operating leverage rom last year, what percentage increase in net operating income will the company realize this year? 5. The sales manager is convinced that a 15% reduction in the selling price, combined with a $77,000 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 $170 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 $1,440,000 net operating income as last year? Complete this question by entering your answers in the tabs below. Bec 1 Red 2 Reg 4 Reg 48 Red SA Reg SB Rego Assume the president expects this year's unit sales to increase by 17%. 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.) Netopating income increases by Reg 4A MacBook All o Fe PD .. $ 12 96 5 6 & 7 00 9 ) 0 HT R T Y U O { { [ F G H J K L V B N MacBOOK AIR Od DIE DO . $ 4 ) 5 & 7 + 6 8 9 O R T Y Y U O P { F G H J K L V 00 N M ? Check 4-0. Assume the president expects this years unit sales to increase by 17%. Using the degree of operating severage from last y what percentage increase in net operating income will the company realize this year? 5. The sales manager is convinced that a 15% reduction in the selling price, combined with a $77,000 Increase in advertising, w increase this year's unit sales by 25% a. Ir 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 $170 per unit thinks that this move, combined with some increase in advertising, would increase this year's unit sales by 25%. How much coule president increase this year's advertising expense and still earn the same $1,440.000 net operating income as last year? Complete this question by entering your answers in the tabs below. Reg1 Reg 2 Reg 3 Reg 4 Req 48 Req5A Reg 58 Reg 6 The sales manager is convinced that a 15% reduction in the selling price, combined with a $77,000 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 (decrease to net operating income MacBook Air a DO 5 6 7 8 9 ) O - R T Y U O { [ F G H J K L V 00 N. ? 4-0. Assume the presioent expects this years unit sales to increase by %. Using the degree of operating severage trom what percentage increase in net operating income will the company realize this year? 5. The sales manager is convinced that a 15% reduction in the selling price, combined with a $77,000 increase in advertis 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 ye 6. The president does not want to change the selling price. Instead, he wants to Increase the sales commission by $1.70 p thinks that this move, combined with some increase in advertising, would increase this year's unit sales by 25%. How much president increase this year's advertising expense and still earn the same $1,440,000 net operating income as last year? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Reg 4 Reg 4 ReqSA Reg 58 Reg 6 The president does not want to change the selling price. Instead, he wants to increase the sales commission by $1.70 per unit. He 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 $1,440,000 net operating income as last year? (Do not round Intermediate calculations.) Show less The amount by which advertising can be erased is Rosa MacBook Air - 0 D DO a s 4 5 6 & 7 00. > 9 O R T Y U O { F G I J L T V n