Last month when Holiday Creations, Incorporated, sold 40,000 units, total sales were $160,000, total variable expenses were $132,800, and fixed expenses were $36,000.

Required:

1. What is the companys contribution margin (CM) ratio?

2. What is the estimated change in the companys net operating income if it can increase sales volume by 700 units and total sales by $2,800? (Do not round intermediate calculations.)