Pringle Company distributes a single product, the companys sale and expenses for a recent month follow:

Total Per Unite

Sales . 225,000 75

Variable expenses 135,000 45

Contribution margin 90,000 30

Fixed Expenses ... 75,000

Net Operating Income 15,000

The company is selling 3,000 units per month.

Required:

What is the companys CM ratio, if the monthly sales increase by $ 120,000 and there is no change in fixed expenses, by how much would you expect monthly net operating income increase?

Refer to the original data; management is considering using higher-quality components that would increase the variable cost by $ 2 per unit. The marketing manager believes that the higher quality product would increase sales by 10%. Should the higher quality components should be used

What is the margin of safety in percentage?

What is a degree of operation leverage?

Estimate the impact on net operating income of a 6% increase in sales