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 $ 1,040,000 Variable expenses 520,000 Contribution margin 520,000 Fixed expenses 200,000 Net operating income $ 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 52,000 units and $2,080,000, 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 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 12% reduction in Ihe selling price, combined with a $70,000 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 $2.10 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. Rea 1 Rea 2 Ren] Rea 4A Rea 46 Rea SA Rea 5 Rea 6 6. The president does not want to change the selling price. Instead, he wants to increase the sales commission by $2.10 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. Reg 1 Reg 2 Reg 3 Reg 4A Reg 48 Req SA Reg 58 Reg 6 What is the product's CM ratio? CM ratio Reg 2 ) Complete this question by entering your answers in the tabs below. ht Reg 1 Reg 2 Req3 Reg 4 Req 4B Reg SA Reg 58 Reg 6 ences Use the CM ratio to determine the break-even point in dollar sales. (Do not round intermediate calculations.) Break-even point in dollar sales Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Reg 4 Req 48 Reg 5 Reg 58 Req6 nces Assume this year's unit sales and total sales increase by 52,000 units and $2,080,000, respectively. If the fixed expenses do not change, how much will net operating income increase? (Do not round intermediate calculations.) Net operating income Roq 4A > book Complete this question by entering your answers in the tabs below. Print Reg 4 rences Reg 1 Reg 2 Reg 3 Req 48 Reg SA Reg 58 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 leverage Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Req 4A Req 48 Req SA Req 5B Reg 6 nces 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.) Not operating income increases by Complete this question by entering your answers in the tabs below. Reg SA Reg 58 Req 6 Reg 1 Reg 2 Reg 3 Req 4A Reg 48 The sales manager is convinced that a 12% reduction in the selling price, combined with a $70,000 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 it his ideas are implemented? (Do not round Intermediate calculations.) Net operating Incomo (losa) Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Req 4A Req 48 Rea SA Reg 58 Req6 The sales manager is convinced that a 12% reduction in the selling price, combined with a $70,000 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 Req5A Rego) Complete this question by entering your answers in the tabs below. Fint Req: Reg 2 Req Req4A Req 45 Red SA Reg 58 Reg 6 rences The president does not want to change the selling price. Instead, he wants to increase the sales commission by $2.10 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 The amount by which advertising can be increased in