Pet Haven Pty Ltd distributes a high-quality dog house that sells for $50 per unit. Variable expenses are $15 per unit, and fixed expenses total $448,000 per year. Its operating results for last year were as follows:

Sales	$800,000
Variable expenses	240,000
Contribution margin	560,000
Fixed expenses	448,000
Net operating income	$112,000

Required:

Answer each question independently based on the original data:

1. Determine the break-even point in dollar sales. (1 mark)
2. Assume this years unit sales and total sales increase by 2,000 units and $100,000, respectively. If the fixed expenses do not change, how much will net operating income increase? (1 mark)
3. Assume the president expects this years unit sales to increase by 15%. Using the degree of operating leverage from last year, what percentage increase in net operating income will the company realise this year? How much would this increase be in dollars? (2 marks)
4. The sales manager is convinced that a 5% reduction in the selling price, combined with a $52,000 increase in advertising, would increase this years unit sales by 25%. What would be this years net operating income if his ideas are implemented? (1 mark)