Question 1. (10 Marks) ABC Inc. produces and sells a single product. The company's contribution format income statement for 2021 is provided below: $4,000 $2,000 $1,000 Sales (4,000 units* $1 per unit) Variable Expenses Fixed Expenses Net Operating Income Required: 1) Compute the break-even point in both units and dollar sales $1,000 2) Compute the company's margin of safety in both units and dollar sales 3) Compute the company's operating leverage ratio (Without preparing an income statement, if ABC Inc. increases its sales by 40%, how much (in percentage) net operating income would increase? 4) The marketing manager suggests ABC Inc. cut the selling price by $0.2 per unit and increase the advertising budget (a fixed expense) by $200 per year. He predicts that these two changes would increase annual sales by 20%. How much is the net operating income if this proposal is implemented? What is the overall effect on the company's net operating income of these changes? 5) Refer to the original data. ABC Inc. has a competitor: DEF Inc. operating in the same industry. DEF'S contribution format income statement for 2021 is provided below: $4,000 Sales (4,000 units *$1 per unit) Variable Expenses Fixed Expenses $1,000 $2,000 Net Operating Income $1,000 In 2022, due to the pandemic, both ABC and DEF experienced a 20% decrease in sales, assuming the cost structure of both firms would keep the same. Which company has a lower net operating income