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Whirly Corporation's contribution format income statement for the most recent month is shown below: Required: (Consider each case independently): 1. What would be the revised net operating income per month if the sales volume increases by 80 units? 2. What would be the revised net operating income per month if the sales volume decreases by 80 units? 3. What would be the revised net operating income per month if the sales volume is 7,600 units? Lin Corporation has a single product whose selling price is $134 per unit and whose variable expense is $67 per unit. The company's monthly fixed expense is $32,300. Required: 1. Calculate the unit saies needed to attain a target profit of $7,900. (Do not round intermediate calculations.) 2. Calculate the dollar sales needed to attain a target profit of $8,600. (Round your intermediate calculations to the nearest whole number.) Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball, of which 608 is direct labor cost. Last year, the company sold 52,000 of these balls, with the following results: Required: 1. Compute (a) last year's CM ratio and the break-even point in balls, and (b) the degree of operating leverage at last year's sales level. 2 Due to an increse in laboc rates, the company estimates that next year's variable expenses will increase by $3.00 per ball. if this change takes ploce and the selling price per ball remains constant at $25.00, what will be next year's CM ratio and the break-even point in balls? 3. Refer to the data in (2) above. If the expected change in variable expenses takes place, how many balls will have to be sold next year to earn the same not operating income, $199.000, as last year? 4. Refer again to the data in (2) above. The president feeis that the company must raise the selling price of its basketbalis. If Northwood Company wants to maintain the same CM ratio as last year (as computed in requirement fal what selling price per bail must it charge next year to cover the increased labor costs? 5. Refer to the eriginal data. The company is discussing the construction of a new, automated manufacturing plant. The new plant. would slash variable expenses per ball by 40.00%, but it would cause fixed expenses per year to double. If the new plant is bult, what would be the companys new CM ratio and new break-even point in balis? 6. Refer to the data in (5) above. a. If the new plant is buit, how many balls wall have to be sold next year to earn the same not operating income, $199,000, as last year? b. Assume the new plant is buit and that next yoor the company manufectures and sells 52.000 balts (the same number as sold iast. year Piepare a contribution format income statement and compute the degree of operating leverage. Northwood Company wants to maintain the same CM ratio as last year (as computed in requirement fo), what selling price per ball must it charge next year to cover the increased labor costs? 5. Refer to the original dota. The company is discussing the construction of a new, automated manufacturing plant. The new plant would slash variable expenses per ball by 40.00%, but it would cause fixed expenses per year to double. If the new plant is built, what would be the company's new CM ratio and new break-even point in balls? 6. Refer to the data in (5) above. a. If the new plant is built. how many balls will have to be sold next year to earn the same net operating income, $199.000, as tast year? b. Assume the new plant is built and that next year the company manufactures and sells 52,000 balls the same number as sold last year). Prepare a contribution format income statement and compute the degree of operating leverage. Complete this question by entering your answers in the tabs below. Compute (a) last year's CM ratio and the break-even point in balis, and (b) the degree of operating leverage at last year's soles level. (Riound 'Unit sales to break even' to the nearest whole unit and other answers to 2 deeimal places.) 4. Reter again to the data in (L) above. I he president teels that the company must raise the selling price of its basketballs. If Northwood Company wants to maintain the same CM ratio as last year (as computed in requirement la), what selling price per ball must it charge next year to cover the increased labor costs? 5. Refer to the original data. The company is discussing the construction of a new, automated manufacturing plant. The new plant would slash variable expenses per ball by 40.00%, but it would cause fixed expenses per year to double. If the new plant is bulit, what would be the company's new CM ratio and new break-even point in balls? 6. Refer to the data in (5) above. a. If the new plant is built, how many balls will have to be sold next year to earn the same net operating income, $199,000, as last year? b. Assume the new plant is built and that next year the company manufactures and sells 52,000 balls (the same number as sold last year). Prepare a contribution format income statement and compute the degree of operating leverage. Complete this question by entering your answers in the tabs below. Due to an increase in labor rates, the company estimates that next year's variable expenses will increase by $3.00 per ball, If this change takes place and the selling price per ball remains constant at $25.00, what will be next year's CM ratio and the break-even point in balls? (Round "CM ratio" to 2 decimal places and "Unit sales to break even" to the nearest whole unit.) 3. Refer to the data in (2) above. If the expected change in variable expenses takes place, how many balls will have to be sold next year to earn the same net operating income, $199,000, as last year? 4. Refer again to the data in (2) above. The president feels that the company must raise the selling price of its basketbails. If Northwood Company wants to maintain the same CM ratio as last year (as computed in requirement 1a), what selling price per bail must it charge next year to cover the increased labor costs? 5. Refer to the original data. The company is discussing the construction of a new, automated manufacturing plant. The new plant would slash variable expenses per ball by 40.00%, but it would cause fixed expenses per year to double. If the new plant is built, what would be the company's new CM ratio and new break-even point in balls? 6. Refer to the data in ( 5 ) above. a. If the new plant is built, how many balls will have to be sold next year to earn the same net operating income, $199,000, as last. year? b. Assume the new plant is built and that next year' the company manufactures and sells 52,000 bolls (the same number as sold last year). Prepare a contribution format income statement and compute the degree of operating leverage Complete this question by entering your answers in the tabs below. Refer to the data in (2) above. If the expected change in variabie expenses takes place, how many bolls will have to be sold. next year to eam the same net operating income, $199,000, as last year? (fround your answer to the nearest whole unit) year to earn the same net operating income, $199,000, as last year? 4. Refer again to the data in (2) above. The president feels that the company must raise the selling price of its basketballs. If Northwood Company wants to maintain the same CM ratio as last year (as computed in requirement ta). what selling price per bail must it charge next year to cover the increased labor costs? 5. Refer to the original data. The company is discussing the construction of a new, automated manufacturing plant. The new plant would slash variable expenses per ball by 40.00%, but it would cause fixed expenses per year to double. If the new plant is built, what would be the company's new CM ratio and new break-even point in balls? 6. Refer to the data in (5) above. a. If the new plant is buil, how many balls will have to be sold next year to earn the same net operating income, $199,000, as lost year? b. Assume the new plant is bulit and that next year the company manufactures and selis 52,000 balls (the same number as sold last year). Prepare a contribution format income statement and compute the degree of operating leverage. Complete this question by entering your answers in the tabs below. Refer again to the data in (2) above. The president feels that the company must raise the seling price of its bashetbalis. If Northwoed Company wants to maintain the same CM ratio os last year (as computed in requirement la), what selling price per ball must it charge next year to cover the increased iabor costs? (Round your answer to 2 decimal places) Northwood Company wants to maintain the some CM ratio as last year (as computed in requirement la), what selling price per ball must it charge next year to cover the increased labor costs? 5. Refer to the original data. The company is discussing the construction of a new, automated manufacturing plant. The new plant would slash variable expenses per ball by 40.00%, but it would cause fixed expenses per year to double. If the new plant is built, what would be the company's now CM ratio and new break-even point in balls? 6. Refer to the data in (5) above. a. If the new plant is built, how many balls will have to be sold next year to earn the same net operating income, $199.000, as last. year? b. Assume the new plant is built and that next year the company manufactures and sells 52,000 balls (the same number as sold last year) Prepare a contribution format income statement and compute the degree of operating leverage. Complete this question by entering your answers in the tabs below. Refor to the oniginal data. The company is discussing the construction of a new, automated manufacturing plant. The new plant would slash variable expenses per ball by 40.00b, but it would cause fixed expenses per year to double. If the new plant is buit, what would be the companys new CM ratio and new break-even point in balls? (Rounde " CM ratiol to 2 decimal places and "Unit sales to break even" to the nearest whole unit: 3. Refer to the data in (2) above. If the expected change in variable expenses takes place, how many balls will have to be sold next year to earn the same net operating income, $199,000, as last year? 4. Refer again to the data in (2) above. The president feels that the company must raise the selling price of its basketballs if Northwood Company wants to maintain the same CM ratio as last year (as computed in requirement la), what selling price per bail must it charge next year to cover the increased labor costs? 5 Refer to the original data. The company is discussing the construction of a new, automated manufacturing plant. The new plant would slash variable expenses per ball by 40.00%, but it would cause fixed expenses per year to double. If the new plant is built, what would be the company's new CM ratio and new break-even point in balis? 6. Refer to the data in (5) above. a. If the new plant is built, how many balks will have to be sold next year to earn the same net operating income, $199,000, as last year? b. Assume the new plant is built and that next year the company manufactures and selis 52,000 balls (the same number as sold last. year). Prepare a contribution format income statement and compute the degree of operating feverage. Complete this question by entering your answers in the tabs below. If the new plant is buit, how many balls will have to be sold next year to eam the same net operating income, $199,000, as last year? (Round your onswer to the nearest whole und.) voula stasn variagie expenses per dan dy 4u.u%, out it wouna cause nxed expenses per year to ooubie. It the new piant is Duin vould be the company's new CM ratio and new break-even point in balls? 5. Refer to the data in (5) above. a. If the new plant is built, how many balls will have to be sold next year to earn the same net operating income, $199,000, as year? b. Assume the new plant is built and that next year the company manufactures and sells 52,000 balls (the same number as so year). Prepare a contribution format income statement and compute the degree of operating leverage. Complete this question by entering your answers in the tabs below. Assume the new plant is bulit and that next year the company manufactures and sells 52,000 balls (the same number as sold last year). Prepare a contribution format income statement and compute the degree of operating leverage. (Round "Degree of operating leverage" to 2 decimal places.) Feather Friends, Incorporated, distributes a high-quality wooden birdhouse that sells for $40 per unit Variable expenses are $20.00 per unit, and fixed 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 product's CM ratio? 2. Use the CM ratio to determine the break-even point in dollar sales. 3 Assume this year's unit sales and total sales increase by 59,000 units and $2,360,000, respectively. If the fixed expenses do not change, how much will net operating income increase? 4.a. What is the degree of operating leverage based on last year's sales? 4.b. Assume the president expects this year's unit soles to increase by 15\%. 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 manager is convinced that a 12% reduction in the selling price, combined with a $71,000 increase in advertsing, would increase this yeors unit soles by 25% a. If the soles manager is ight, what would be this year's net operating income if his ideas are implemented? b. if the soles manager's ideos are implemented, how much will net operating income increase or decrease over tast year? 6. The president does not want to change the seling price. Instead. he wants to increase the sales commission by $230 per unit. He thinks that this move, combined with some increase in advertising, would increase this year's unit salos by 25%. How much could the president increase this year's adverting expense and stil earn the same $280000 net operating income as last year? change, how much will net operating income increase? 4-a. What is the degree of operating leverage based on last year's sales? 4-b. Assume the president expects this year's 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 realize this year? 5. The sales manager is convinced that a 12% reduction in the selling price, combined with a $71,000 increase in advertising, would increase this year's unit sales by 25%. a. If the sales manager is right, what would be this year's net operating income if his ideas are implemented? b. If the sales manager's ideas are implemented, how much will net operating income increase or decrease over last year? 6. The president does not want to change the selling price. Instead, he wants to increase the sales commission by $2.30 per unit. He thinks that this move, combined with some increase in advertising. would increase this year's unit sales by 25%. How much could the president increase this year's advertising expense and still earn the same $280,000 net operating income as last year? Complete this question by entering your answers in the tabs below. What is the product's CM ratio? thange, how much will net operating income increase? 4-a. What is the degree of operating leverage based on last year's sales? 4-b. Assume the president expects this year's 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 realize this year? 5. The sales manager is convinced that a 12% reduction in the selling price, combined with a $71,000 increase in advertising. would increase this year's unit sales by 25%. a. If the sales manager is right, what would be this year's net operating income if his ideas are impiemented? b. If the sales manager's ideas are implemented, how much will net operating income increase or decrease over last year? 6. The president does not want to change the selling'price. Instead, he wants to increase the sales commission by $2.30 per unit. He thinks that this move, combined with some increase in advertising, would increase this year's unit sales by 25%. How much could the president increase this year's advertising expense and still earn the same $280,000 net operating income as last year? Complete this question by entering your answers in the tabs below. Use the CM ratio to determine the break-even point in dollar sales. (Do not round intermediate calculations.) change, how much will net operating income increase? 4-a. What is the degree of operating leverage based on last year's sales? 4-b. Assume the president expects this year's 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 realize this year? 5. The sales manager is convinced that a 12% reduction in the selling price, combined with a $71,000 increase in advertising. would increase this year's unit sales by 25%. a. If the sales manager is right, what would be this year's net operating income if his ideas are implemented? b. If the sales manager's ideas are implemented, how much will net operating income increase or decrease over last year? 6. The president does not want to change the selling'price. Instead, he wants to increase the sales commission by $2.30 per unit. He thinks that this move, combined with some increase in advertising, would increase this year's unit sales by 25%. How much could the president increase this years advertising expense and stal earn the same $280.000 net operating income as last year? Complete this question by entering your answers in the tabs below. Assume this year's unit sales and total sales increase by 59,000 units and $2,360,000, respectively. If the fixed expenses do not change, how much will net operating income increase? (Do not round intermediate calculations.) change, how much will net operating income increase? 4.a. What is the degree of operating leverage based on last year's sales? 4-b. Assume the president expects this year's 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 realize this year? 5. The soles manager is convinced that a 12% reduction in the selling price, combined with a $71,000 increase in advertising. would increase this year's unit sales by 25%. a. If the sales manager is right, what would be this year's net operating income if his ideas are implemented? b. If the sales manager's ideas are implemented, how much will net operating income increase or decrease over last year? 6. The president does not want to change the selling'price. Instead, he wants to increase the sales commission by $2,30 per unit. He thinks that this move, combined with some increase in advertising, would increase this year's unit sales by 2.5%. How much could the president increase this year's advertising expense and still earn the same $280.000 net operating income as last year? Complete this question by entering your answers in the tabs below. What is the degree of operating leverage based on last year's sales? (Round intermediate calculations and final answers to 2 decimal places.) hange, how much will net operating income increase? 4-a. What is the degree of opecating leverage based on last year's sales? 4b. Assume the president expects this year's 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 realize this year? 5. The sales manager is convinced that a 12% reduction in the selling price, combined with a $71,000 increase in advertising, would increase this year's unit sales by 25%. a. If the sales manager is right, what would be this year's net operating income if his ideas are implemented? b. If the sales manager's ideas are implemented, how much will net operating income increase or decrease over last year? 6. The president does not want to change the selling price. Instead, he wants to increase the sales commission by $2.30 per unit. He thinks that this move, combined with some increase in advertising, would increase this year's unit sales by 25%. How much could the president increase this year's advertising expense and still earn the same $280,000 net operating income as last year? Complete this question by entering your answers in the tabs below. Assume the president expects this year's unit sales to increase by 15%. Using the degree of eperating leverage from last year, what percentage increase in net operating income will the company realize this year? (Round intermediate caiculatians and finat answer to 2 decimal places.) change, how much will net operating income increase? 4.a. What is the degree of operating leverage based on last year's sales? 4-b. Assume the president expects this year's 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 realize this year? 5. The sales manager is convinced that a 12% reduction in the selling pice, combined with a $71,000 increase in advertising, would increase this year's unit sales by 25% a. If the sales manager is tight, what would be this year's net operating income if his ideas are implemented? b. If the sales manager's ideas are implemented, how much will net operating income increase or decrease over last year? 6. The president does not want to change the selling price. Instead, he wants to increase the sales commission by $2.30 per unit He thinks that this move, combined with some increase in advertising, would increase this year's unit sales by 25%. How much could the president increase this year's advertising expense and still earn the same $280,000 net operating income as last year? Complete this question by entering your answers in the tabs below. The sales manager is convinced that a 12% reduction in the selling price, combined with a $71,000 increase in advertising. would increase this year's unit sales by 25%. If the sales manager is night, what would be this year's net operating income if his ideas are implemented? (Do not round intermediate calculations.) change, how much will net operating income increase? 4-3. What is the degree of operating leverage based on last year's sales? 4-b. Assume the president expects this year's 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 realize this year? 5. The sales manager is convinced that a 12% reduction in the selling price, combined with a $71,000 increase in advertising, would increase this year's unit sales by 25%. a. If the sales manager is right, what would be this year's net operating income if his ideas ate implemented? b. If the sales manager's ideas are implemented, how much will net operating income increase or decrease over last year? 6. The president does not want to change the selling price. Instead, he wants to increase the sales commission by $2.30 per unit. He thinks that this move, combined with some increase in advertising, would increase this year's unit sales by 25%. How much could the president increase this year's advertising expense and still earn the same $280,000 net operating income as last year? Complete this question by entering your answers in the tabs below. The sales manager is convinced that a 12% reduction in the seling price, combined with o 571,000 increase in advertising. would increase this year's unit sales by 25%. If the sales manager's ideas are implemented, how much will net operating income increase or decrease over last year? (Negative amounts should be input with a minus sign.) change, how much will net operating income increase? 4-a. What is the degree of operating leverage based on last year's sales? 4-b. Assume the president expects this year's unit sales to increase by 15%. Using the degree of operating leverage from iast year, what percentage increase in net operating income will the company realize this year? 5. The sales manager is convinced that a 12% reduction in the selling price, combined with a $71,000 increase in advertising. would increase this year's unit sales by 25%. a. If the sales manager is right, what would be this year's net operating income if his ideas are implemented? b. If the sales manager's ideas are implemented, how much will net operating income increase or decrease over last year? 6. The president does not want to change the selling price. Instead, he wants to increase the sales commission by $2.30 per unit He thinks that this move, combined with some increase in advertising, would increase this year's unit sales by 25%. How much could the presldent increase this year's advertising expense and still earn the same $280.000 net operating income as last year? Complete this question by entering your answers in the tabs below. The prevident does not want to change the seiling price, Instead, he wants to increase the ales commission by $2.30 per unit, He thiniks that this move, combined with some increase in advertising, would increase this year's unit sales by 25%. How much could the president increase this year's advertising expense and stal earn the same $280,000 net operating income as Last year? (Do not round intermediate calculations?)
