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Haiko Company distributes a single product. The company's sales and expenses for last month follow: Total Per unit Sales 625,000 $25 250,000 10 Variable expenses
Haiko Company distributes a single product. The company's sales and expenses for last month follow: Total Per unit Sales 625,000 $25 250,000 10 Variable expenses Contribution margin 15 375,000 285,000 Fixed expense 90,000 Net operating income Required: 4. What is the company's CM ratio? If sales increase by $60,000 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase? 5. a) What is the degree of operating leverage based on last month's sales? b) Assume the president expects this month's sales to increase by 10%. Using the degree of operating leverage from last month, what percentage increase in net operating income will the company realize this month? 6. Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $2 per unit. What is the company's new break-even point in unit sales
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