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Hawk Homes, Inc., makes one type of birdhouse that it sells for $30 each. Its variable cost is $15 per house, and its fixed costs
Hawk Homes, Inc., makes one type of birdhouse that it sells for $30 each. Its variable cost is $15 per house, and its fixed costs total $13,840 per year. Hawk currently has the capacity to produce up to 2,000 birdhouses per year, so its relevant range is 0 to 2,000 houses. Required: 1. Prepare a contribution margin income statement for Hawk assuming that it sells 1,100 birdhouses. 2. Calculated Hawk's contribution margin per unit and its contribution margin ratio. 3. Calculate Hawk's break-even point in sales dollars. 4. Suppose Hawk wants to earn $20,000 this year. Determine how many birdhouses it must sell to generate this amount of profit. Is it possible with the given capacity? 5. What is Hawk's degree of leverage based on the production of 1,100 birdhouses? 6. If the management of Hawk Homes, Inc. believes that there will be a 15% increase in sales next year, using the degree of leverage from above, what will the % increase in net operating income be
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