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Feather Friends, Incorporated, distributes a high$-$quality wooden birdhouse that sells for $$20$ per unit. Variable expenses are $$10$ per unit, and fixed expenses total $$190,000$ per year. Its operating results for last year were as follows:

Sales $(23,000$ units$)$ $ $460,000$

Variable expenses $230,000$

Contribution margin $230,000$

Fixed expenses $190,000$

Operating income $ $40,000$

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 sales dollars.

$3.$ Assume this year$$s total sales increase by $$40,000.$ If the fixed expenses do not change, how much will operating income increase?

Assume that the operating results for last year were as in the question data.

$4-$a$.$ Compute the degree of operating leverage based on last year$$s sales.

$4-$b$.$ The president expects sales to increase by $16\%$ next year. Using the degree of operating leverage from last year, what percentage increase in operating income will the company realize this year? Calculate the dollar increase in operating income.

$5.$ The sales manager is convinced that a $12\%$ reduction in the selling price, combined with a $$32,000$ increase in advertising, would increase this year's unit sales by $30\%.$

a$.$ If the sales manager is right, what would be this year's operating income if his ideas are implemented?

b$.$ If the sales manager's ideas are implemented, how much will 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 $$1$ per unit. He thinks that this move, combined with some increase in advertising, would increase this year's unit sales by $30\%.$ How much could the president increase this year's advertising expense and still earn the same $$40,000$ operating income as last year?