Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

i need help plz Feather Friends, Incorporated, distributes a high-quality wooden birdhouse that sells for $80 per unit. Variable expenses are $40,00 per unit, and

i need help plz image text in transcribed
image text in transcribed
Feather Friends, Incorporated, distributes a high-quality wooden birdhouse that sells for $80 per unit. Variable expenses are $40,00 per unit, and fixed expenses total $160,000 per yeat, its operating results for last year were as follows: 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 49,000 units and $3,920,000, respectively. If the fixed experises 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? 4b. 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 the selling price, combined with a $63,000 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 $1.70 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 eatn the same $960.000 net operating income as last year? 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 49,000 units and $3,920,000, respectively. If the froed 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? 4b. Assume the president expects this year's unit sales to increase by 17% Using the dogree of operating levetage 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% teduction in the selling price, combined with a $63,000 increase in advertising, would increase this year's unit sales by 25% a. If the sales manager is fight, what would be this year's net operating income if his ideas afe implemented? b. If the sales manager's ideas are implemented, how much will net operating income increase or decrease over liast year? 6. The president does not want to change the selling price. instead, he wants to increase the sales commission by $1.70 per unit He thinks that thits 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 eam the same $960,000 net operating income as last year? Complete this question by entering your answers in the tabs below. What is the peoduct's CM ratio

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

International Financial Reporting Standards A Practical Guide

Authors: Hennie Van Greuning, Darrel Scott, Simonet Terblanche

6th Edition

0821384287, 978-0821384282

More Books

Students also viewed these Accounting questions

Question

What is a multiple support agreement, and what is its purpose?

Answered: 1 week ago

Question

6. Identify seven types of hidden histories.

Answered: 1 week ago

Question

What is human nature?

Answered: 1 week ago