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Need answers to 5 and 6 Problem 5-23 Basics of CVP Analysis [LO5-1, LO5-3, LO5-4, LO5-5, LO5-8] Feather Friends, Inc., distributes a high-quality wooden birdhouse
Need answers to 5 and 6
Problem 5-23 Basics of CVP Analysis [LO5-1, LO5-3, LO5-4, LO5-5, LO5-8] Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $40 per unit. Variable expenses are $20.00 per unit, and fixed expenses total $180,000 per year. Required: Answer the following independent questions: 1. What is the product's CM ratio? 50% CM ratio 2. Use the CM ratio to determine the break-even point in dollar sales 360,000 Break-even point in sales dollars 3. Due to an increase in demand, the company estimates that sales will increase by $45,000 during the next year. By how much should net operating income increase (or net loss decrease) assuming that fixed expenses do not change? Net operating income increases by 22.500Step by Step Solution
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