Problem 5-23 i Save & Exc Saved Help Check my work mode: This shows what is correct or incorrect for the work you have completed so far. It does not indicate completion. Return t 1 Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $80 per unit. Variable expenses are $40.00 per unit and fixed expenses total $200,000 per year. Its operating results for last year were as follows: 10 $2,160,000 1,080,000 1,080,000 Sales points Variable expenses Contribution margin Fixed expenses 200,000 880,000 Net operating income 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. If this year's sales increase by $43,000 and 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 sales to increase by 13%. 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 14% reduction in the selling price, combined with a $62,000 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? 5. The sales manager is convinced that a 14% reduction in the selling price, combined with a $62,000 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? ints 6. The president does not want to change the selling price. Instead, he wants to increase the sales commission by $2.50 per unit. He thinks that this move, combined with some increase in advertising, would increase this year's sales by 25%. How much could the president increase this year's advertising expense and still earn the same $880,000 net operating income as last year? X Answer is not complete Complete this question by entering your answers in the tabs below. Reg 1 Req 3 Req 2 Req 4A Req 4B Reg 5A Req 5B Reg 6 If this year's sales increase by $43,000 and fixed expenses do not change, how much will net operating income increase? Net operating income by increases 23,500 Req 2 Req 4A 5. The sales manager is convinced that a 14% reduction in the selling price, combined with a $62,000 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 $2.50 per unit. He thinks that this move, combined with some increase in advertising, would increase this year's sales by 25%. How much could the president increase this year's advertising expense and still earn the same $880,000 net operating income as last year? X Answer is not complete. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 6 Req 3 Req 4A Req 4B Req 5A Req 5B What the degree of operating leverage based on last year's sales? (Round intermediate calculations and final answers to 2 decimal places.) Degree of operating leverage 17.22 X Req 3 Req 4B 5. The sales manager is convinced that a 14% reduction in the selling price, combined with a $62,000 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 $2.50 per unit. He thinks that this move, combined with some increase in advertising, would increase this year's sales by 25%. How much could the president increase this year's advertising expense and still earn the same $880,000 net operating income as last year? X Answer is not complete. Complete this question by entering your answers in the tabs below. Req 3 Reg 1 Req 2 Req 4A Req 4B Req 5A Req 5B Req 6 Assume the president expects this year's sales to increase by 13%. Using the degree of operating leverage from last year, what percentage increase in net operating income will the company realize this year? (Round intermediate calculations and final answer to 2 decimal places.) Net operating income increases by Req 5A Req 4A 4-a. What is the degree of operating leverage based on last year's sales? 4-b. Assume the president expects this year's sales to increase by 13%. 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 14% reduction in the selling price, combined with a $$62,000 increase 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? 10 advertising, would points 6. The president does not want to change the selling price. Instead, he wants to increase the sales commission by $2.50 per unit. He thinks that this move, combined with some increase in advertising, would increase this year's sales by 25%. How much could the president increase this year's advertising expense and still earn the same $880,000 net operating income as last year? X Answer is not complete Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4A Req 4B Req 5A Req 5B Req 6 The sales manager would increase this year's unit sales by 25%. If the sales manager is right, what would be this year's net operating income his ideas are implemented? (Do not round intermediate calculations.) convinced that a 14% reduction in the selling price, combined with a $62,000 increase in advertising, Net operating income (loss) Req 5B Req 4B 4-a. What is the degree of operating leverage based on last year's sales? 4-b. Assume the president expects this year's sales to increase by 13%. Using the degree of operating leverage from last year, what percentage increase in net operating income will the company realize this year? 10 5. The sales manager is convinced that a 14% reduction in the selling price, combined with a $62,000 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? points 6. The president does not want to change the selling price. Instead, he wants to increase the sales commission by $2.50 per unit. He thinks that this move, combined with some increase in advertising, would increase this year's sales by 25%. How much could the president increase this year's advertising expense and still earn the same $880,000 net operating income as last year? Answer is not complete. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Reg 4A Reg 5A Req 6 Reg 4B Reg 5B The sales manager is convinced that a 14% reduction in the selling price, combined with a $62,000 increase in advertising, would inc income increase or decrease over last year? (Negative amounts should be input with a minus sign.) rose thic ideas are implemented, how much will net operating sales by 25% , If the sales ma Increase (decrease) to net operating income KReq 5A Req 6 6. The president does not want to change the selling price. Instead, he wants to increase the sales commission by $2.50 per unit. He thinks that this move, combined with some increase in advertising, would increase this year's sales by 25%. How much could the president increase this year's advertising expense and still earn the same $880,000 net operatingg income as last year? Answer is not complete. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4A Req 4B Req 5A Req 5B Req 6 The president does not want to change the selling price. Instead, he wants to increase the sales commission by $2.50 per unit. He thinks that this move, combined with some increase in advertising, would increase this year's sales by 25%. How much could the president increase this year's advertising expense and still earn the same $880,000 net operating income as last year? Show less The amount by which advertising can be increased is Reg 6 KReq 5B