Osprey Co. manufactures and sells economically priced kayak paddles. Information for the most recent year-end is given below:

Sales (30,000 units)	$1,800,000
Variable expenses	720,000
Contribution margin	1,080,000
Fixed expenses	350,000
Operating income	$730,000

You are working as an intern at Osprey. The Controller wants to test your understanding of CVP analysis and has posed the following questions.

1. Contribution Margin Ratio

2, How many units does Osprey need to sell to break even

3. Break even point in sales dollars

4. Assume sales increase by $270,000 next year. If cost behavior patterns remain unchanged, by how much will the net operating income increase?

5. Assume Next years management wants to earn a profit of $830,000. How many units will Osprey need to sell to earn this target profit?

6.; Refer to the original data. Compute Osprey's margin of safety in dollars.

7. Compute Osprey's margin of safety percentage.

8. Refer to the original data. In an effort to improve product quality, Osprey is considering the use of higher quality fiberglass for its paddles. The higher-quality fiberglass would increase variable costs by $2 a unit, but management could eliminate one quality inspector who is paid a salary of $60,000 per year. The sales manager estimates that the higher-quality fiberglass would increase sales by 15%.

Assuming the changes are made as described above, what would operating income be?