Feather Friends, Incorporated, distributes a high-quality wooden birdhouse that sells for $40 per unit. Variable Expenses are $20 per unit, and fixed expenses total 200,000 per year. Its operating resumts for last tear were as follows:

Feather Friends, Incorporated, distributes a high-quality wooden birdhouse that sells for $40 per unit Variable expenses are $20.00 per unit, and fixed expenses total $200.000 per year. Its operating results for last year were as follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 1,040,000 520,000 520,000 200,000 $ 320,000 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 year's unit sales and total sales increase by 42,000 units and $1,680,000, 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? 5. The sales manager is convinced that a 12% reduction in the selling price, combined with a $63,000 increase in advertising, would 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 42,000 units and $1,680,000, 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? 5. The sales manager is convinced that a 12% reduction in the selling price, combined with a $63,000 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 $2.40 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 $320,000 net operating income as last year? Complete this question by entering your answers in the tabs below. Req 1 Req 2 What is the product's CM ratio? CM ratio 50 % Req 3 Req 4A Req 1 Req 4B Req 5A Req 2 > Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4A Req 48 Reg 1 Req 5A Req 58 Use the CM ratio to determine the break-even point in dollar sales. (Do not round intermediate calculations.) Break-even point in dollar sales $ 400,000 Req 6 Req 6 Assume this year's unit sales and total sales increase by 42,000 units and $1,680,000, respectively. If the fixed expenses do not change, how much will net operating income increase? (Do not round intermediate calculations.) Net operating income Req 1 Reg 2 Req 3 increases Req 4A by Req SB Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Req 3 Req 4A 1.62 Req 48 Reg 6 Complete this question by entering your answers in the tabs below. Req 1 Req SA 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? (Round intermediate calculations and final answer to 2 decimal places.) Net operating income increases by Req 2 Req 3 Reg 4A 19.50 % Req 4B Reg SB Req 6 Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Reg 3 Reg 4A Req 4B Req 5A Req 58 Reg 6 The sales manager is convinced that a 12% reduction in the selling price, combined with a $63,000 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.) Net operating income (Joss) Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4A Req 4B Req 6 Req 1 Req 2 Req 3 Req 4A Req 48 The amount by which advertising can be increased is Req SA Req SB Req 6 The president does not want to change the selling price. Instead, he wants to increase the sales commission by $2.40 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 $320,000 net operating income as last year? (Do not round intermediate calculations.) Show less A