Feather Friends, Incorporated, 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	$ 3,360,000
Variable expenses	1,680,000
Contribution margin	1,680,000
Fixed expenses	180,000
Net operating income	$ 1,500,000

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 years unit sales and total sales increase by 48,000 units and $5,760,000, 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 12%. Using the degree of operating leverage from last year, what percentage increase in net operating income will the company realize this year?