Feather Friends, Incorporated, distributes a high-quality wooden birdhouse that sells for $20 per unit. Variable expenses are $8 per unit, and fixed expenses total $180,000 per year. Its operating results for last year were as follows: Sales Variable expenses Contribution margin Pixed expenses Het operating income 400,000 160.000 240,000 180,000 $ 60,000 5 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 3,750 units and $75,000, respectively. If the fixed expenses do not change. how much will net operating income increase? 4-3. What is the degree of operating leverage based on last year's sales? 4-6. 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? 5. The sales manager is convinced that a 10% reduction in the selling price, combined with a $30,000 increase in advertising, would a. If the sales manager is right, what would be this year's net operating income of 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 $1 per unit. Ho 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 $60,000 net operating Income as last year? sing, would increase this year's unit sales by 25 president increase this year's advertising expense and still earn the same $60,000 net operating income as la Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Req 4A Req 4B Req 5A Reg 58 Reg 6 What is the product's CM ratio? CM ratio % Reg Reg 2 > Complete this question by entering your answers in the tabs below. Reg 1 Regla Reg 3 Req 4A Reg 4B Reg SA Reg 58 Reg 6 Use the CM ratio to determine the break-even point in dollar sales. (Do not round Intermediate calculations.) Break-even point in dollar sales Reg 1 Reg 2 Reg I Req 4A Req 4B Req 5A Reg 5B Reg 6 Assume this year's unit sales and total sales increase by 3,750 units and $75,000, respectively. If the fixed expenses do not change, how much will net operating income increase? Net operating income by tabs below. Reg 1 Reg 2 Reg 3 Req 4A Reg 4B Reg SA Reg 58 Reg 6 What is the degree of operating leverage based on last year's sales? Degree of operating leverago Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Req 4A Req 4B Reg 5A Red SB Reg 6 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? Not operating income increases by Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Req3 Req 4A Reg 48 I Rea SA Reg 58 Reg 6 The sales manager is convinced that a 10% reduction in the selling price, combined with a $30,000 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 ir his ideas are implemented? Net operating income (105) Lume as last year Complete this question by entering your answers in the tabs below. Req1 Reg 2 Req3 Req 4A Req 48 Req SA Reg 58 Reg 6 The sales manager is convinced that a 10% reduction in the selling price, combined with a $30,000 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 Req 1 Req 2 Reg 3 Reg 4A Req 48 Reg SA Reg 58 Req6 The president does not want to change the selling price. Instead, he wants to increase the sales commission by $1 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 $60,000 net operating Income as last year? The amount by which advertising can be increased is Show less