Problem $6-23($Algo$)$ CVP Applications; Contribution Margin Ratio: Degree of Operating Leverage $[$LO$6-1,$ LO$6-3,$ LO$6-4,$ LO$6-5,$ LO$6-8]$Feather Friends, Incorporated, distributes a high$-$quality wooden birdhouse that sells for $$80$ per unit. Variable expenses are $$40\mathrm{.}00$per unit, and fixed expenses total $$180,000$ per year. Its operating results for last year were as follows:SalesContributionFixed expensesNet operating incomeRequired:$1.$ What is the product's CM ratio?Answer each question independently based on the original data:$2.$ Use the CM ratio to determine the break$-$even point in dollar sales$\mathrm{.}3.$ Assume this year's unit sales and total sales increase by $52,000$ units and $$4,160,000,$ respectively. If the fixed expenses do notchange, how much will net operating income increase?$4-$a$.$ What is the degree of operating leverage based on last year's sales?rair$4-$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 $13\%$ reduction in the selling price, combined with a $$61,000$ increase in advertising, wouldincrease this year's unit sales by $25\%.$a$.$ If the sales manager is right. what would be this year's net operating income if his ideas are implemented?Reg $1$b$.$ If the sales manager's ideas are implemented, how much will net operating income increase or decrease over last year?Tne preslaent does not want to change tne selng prce. instead, ne wants to Increase tne sales commisslon by $250$ per unit. epresident increase this year's advertising expense and still earn the same $$860,000$ net operating income as last year?CM ratioComplete this question by entering your answers in the tabs below.What is the product's CM ratio?Reg $1$Reg $1$Break$-$even point in dollar salesNet operating incomeReq $1$Reg $2$Reg $1$RegReq $2$Degree of operating leverageReg $1$Reg $2$Reg $1$Reg $2$$ $2,088,000\%$Net operating income increases byReg $1$Use the CM ratio to determine the break$-$even point in dollar sales. $($Do not round intermediate calculations.$)$final answer to $2$ decimal places.ReaNet operating income $($loss$)180,080$$ $860,0$a$0$Reg $3$Reg $3$Reg $3$Reg $2$Reg $3$Reg $2$Reg$3$Assume this year's unit sales and total sales increase by $52,000$ units and $$4,160,000,$ respectively. If the fixed expenses donot change, how much will net operating income increase? $($Do not round intermediate calculations.$)$RegRegIncrease $($decrease$)$ to net operating incomeReg $4$AReg $4$AReg $3$Req $4$AReq $4$AWhat is the degree of operating leverage based on last year's sales? $($Round intermediate calculations and final answer to $2$decimal places.$)$Req $4$AThe amount by which advertising can be increased isReg $4$B$\%$Reg $4$BReg $4$AReq $4$BReg $4$AReq $4$BReg $4$Assume the president expects this unit sales to increase by $15\%.$ Using the degree of operating leverage from last year,Reg $4$BReg $5$AReq $5$AReg $4$BReg $5$AReg $4$BReq $5$AReg $4$BReg $5$AReg $5$BReg $5$AThe sales manager is convinced that a $13\%$ reduction in the selling price, combined with a $$61,000$ increase in advertising,would increase this year's unit sales by $25\%.$ If the sales manager is right, what would be this year's net operating income ifhis ideas are implemented? $($Do not round intermediate calculations.$)$Reg $5$AReg $5$BReg $5$BReg $5$BReg $58$Reg $5$AReg $5$BRegReg $5$BReq $6............$Reg $5$BThe sales manager is convinced that a $13\%$ reduction in the selling price, combined with a $$61,000$ increase in advertising,would increase this year's unit sales by $25\%.$ If the sales manager's ideas are implemented, how much will net operatingincome increase or decrease over last year? $($Negative amounts should be input with a minus sign.$)$Reg $6$RegReq $6$Reg Emuch cOuld theReq $6$Reg $6$The president does not want to change the selling price. Instead, he wants to increase the sales commission by $$2\mathrm{.}50$ perunit. He thinks that this move, combined with some increase in advertising, would increase this year's unit sales by $25\%.$ Howmuch could the president increase this year's advertising expense and still earn the same $$860,000$ net operating income aslast year? $($Do not round intermediate calculations.$)$Show less Awhat percentage increase in net operating income will the company realize this year? $($Round intermediate calculations and