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Please help with 5 and 6 only THANK YOU Feather Ffiends, Incorporated, distributes a high-qualify wooden birdhouse that sells for $80 per unit. Variable expenses
Please help with 5 and 6 only THANK YOU
Feather Ffiends, Incorporated, distributes a high-qualify wooden birdhouse that sells for $80 per unit. Variable expenses are $4000 per unit and fored expenses total $200.000 per year. Its operating results for last year were as follows: Required: Answer each question independently based on the original data. 1. What is the products CM ratio? 2. Use the CM ratio to determine the break-even point in dolar sales. 3. Assume this year's unit sales and total sales increate by 49,000 units and $3,920,000, respectively. If the fixed expenses do not change, how much wit net operating income increase? 4. What is the degree of coerating leverage based on last year's sales? 4-b. Assume the president expects this year's unit saies to increase by 12%, Using the degree of operating leverage from last year, what percentage increase in net operating income will the company realize this year? 5. The sales manser is corvinced that a 12K reduction in the seling price, combined with a 579.000 increase in advertising. would increase this years unit sales by 25% a. If the sales manoger is right, what would be this years net eperating income if his ideas are implemented? b. If the sales manager's ideas are implemented, how much wil net operating income increase or decrease over last year? 6. The president does not want to change the selling price. instead, he whits to increase the sales commission by $2.00 per unit. He thinks that this move, combined with some inciease in odvertising, would increase this year's unit sales by 25%. How much could the president increase this years advertising expense and stil earn the same $760,000 net operating income as last year Step by Step Solution
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