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 $180,000 per year. Its operating results for last year were as follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 2, eee, eee 1,680, eee 1, eee, eee 180,000 $ 820, eee 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 51.000 units and $4,080,000, respectively. If the fixed expenses do not change, how much wil net operating income increase? 4-5. 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 20%. Using the degree of operating leverage from last year, what percentage increase in net operating income will the company realize this year? what percentage increase in net operating income will the company realize this year? 5. The sales manager is convinced that a 10% reduction in the selling price, combined with a $79,000 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 30 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 $820,000 net operating income as last year? Complete this question by entering your answers in the tabs below. Reqi Reg 2 Req3 Req 4A Roq 4B Reg SA Req 5B Reg 6 What is the product's CM ratio? CM ratio cences Reg 1 Req 2 Reg 3 Reg 4 Reg 48 Reg SA Req6 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 salos Reg 1 Reg 2 Reg 3 Reg 4A Reg 4B Reg SA Roq 58 Reg 6 Assume this year's unit sales and total sales increase by 51,000 units and $4,080,000, respectively. If the fixed expenses do not change, how much will net operating income increase? (Do not round intermediate calculations.) Not aparating income by Reg 1 Reg 2 Reg 3 Req 4A Req 4B Reg 5A Reg 5B Reg 6 What is the degree of operating leverage based on last year's sales? (Round intermediate calculations and final answers to 2 decimal places.) Degree of operating loverage Reg 6 Reg 5A Reg 5B Rea 1 Reg 2 Reg 3 Reg 4A Reg 4B Assume the president expects this year's unit sales to increase by 20%. 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.) Not operating income increases by Reg 5B Reg 6 Reg 5A Req3 Reg 4 Reg 43 Reg 2 Req1 The sales manager is convinced that a 10% reduction in the selling price, combined with a $79,000 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.) Not operating income (105) Reg 1 Reg 2 Reg 3 Reg 4 Reg 4B Req 5A Reg 6 Req 58 The sales manager is convinced that a 10% reduction in the selling price, combined with a $79,000 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 Reg1 Reg 2 Reg 3 Reg 44 Reg 4B Reg SA Reg 58 Reg 6 The president does not want to change the selling price. Instead, he wants to increase the sales commission by $2.30 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 $820,000 net operating income as last year? (Do not round intermediate calculations.) Show less The amount by which advertising can be increased is