Answered step by step
Verified Expert Solution
Question
1 Approved Answer
PLZ HELP ASAP Feather Friends, Incorporated, distributes a high-quality wooden birdhouse that sells for $80 per unit. Variable expense 5 are $40.00 per unit, and
PLZ HELP ASAP
Feather Friends, Incorporated, distributes a high-quality wooden birdhouse that sells for $80 per unit. Variable expense 5 are $40.00 per unit, and fixed expenses total $160,000 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 breakeven point in dollar sales. 3. Assume this year's unit sales and total sales increase by 40,000 units and $3,200,000, 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 sales to increase by 15%. Using the degree of operating leverage from last year, what percentage increase in net operating income wit the company realize this year? 5. The sales manager is convinced that a 12% reduction in the seling price, combined with a $60,000 increase in advertising. would increase this years unit sales by 25%. a. If the sales manaper is thaht; what would be this year's net operating theome if his tefeas ate inplamented? 6 If the sales manager's ideas are implemented, how much wil net operating income increase or dectease over last year? 6. The president does not want to change the selling price. Instead, he wants to increase the sales commission by $160 per unit He thinks that this move, combined with some increase in advertising, would increase this years unit sales by 25%. How much could the prestent increase this yeares advertising expense and stil earn the same $920,000 net operating income as tast yea Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started