https/ewcor html Feather Friends, Inc. distributes a high-quality wooden birdhouse that sells for $20 per unit. Varlable expenses are $8 per unit, and fixed expenses total $180,000 per year. Its operating results for last year were as follows: 489,000 Sales Variable expenses Contribut Lon margin Fixed expenses Net operating income Net operat ing Income 60,600 Required: Answer each question independently based on the orliginal data: 1. What is the product's CM ratio? 2 Use the CM ratio to determine the break even point in dollar sales 3. If this years sales increase by $75,000 and fixed expenses do not change, how much will net operating income Increase? 4-a. What is the degree of operating leverage based on last years sales? 4-b. Assume the president expects this year's 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, con bined with a S 000 increase in advertising, would increase this year's unit sales by 25%. a. If the sales manager is right, what would be this years net operating income if his Ideas are implemented? b. Do you recommend Implementing the sakes managers suggestions? 6. 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 sales by 25% How much cold the president increase this year's advertising expense and still earn the same $60000 net operating income as last year? ?Prey 1of2 Next > e to search