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Transcribed image text: Whirly Corporation's contribution format income statement for the most recent month is shown below: Required: (Consider each case independently) 1. What would be the revised net operating income per month if the sales volume increases by 90 units? 2. What would be the revised net operating income per month if the sales volume decreases by 90 units? 3. What would be the revised net operating income per month if the sales volume is 7,400 units? Lin Corporation has a single product whose selling price is $135 per unit and whose variable expense is $54 per unit. The company's monthly fixed expense is $40.000 Required: 1. Calculate the unit sales needed to attain a target profit of $8,600. (Do not round intermediate calculations.) 2. Calculate the doliar sales needed to attain a target profit of $9.800. (Round your intermediate calculations to the' nearest whole number.) Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball, of which 60% is direct. labor cost. Last year, the company sold 32,000 of these balts, with the following results: Required: 1 Compute (a) last year's CM ratio and the break-even point in balls, and (b) the degree of operating leverage at last year's sales level 2. Due to an increase in labor rates, the company estimates that next year's variable expenses will increase by $3.00 per ball, if this change takes place and the selling price per bali remains constant at $25.00, what will be next year's CM ratio and the break-even point in balis? 3. Refer to the data in (2) above. If the expected change in variable expenses takes place, how many balls will have to be sold next year to earn the same net operating income, $109,000, as last year? 4 Refer again to the data in (2) above. The president feels that the company must raise the selling price of its baskethalis. If Northwood Compary wants to maintain the same CM ratio as last year (as computed in requirement 10), what selling price per ball must it charge next year to cover the increased labor costs? 5. Refer to the original data. The company is discussing the construction of a new, automated menufacturing plant. The new plant would slash variable expenses per bail by 40005 , but it would cause fixed expenses per year to double. If the new plant is built, what woold be the company's new CM ratio and new break-even point in balis? 6. Refer to the data in (5) above a. If the new piant is buiit, how many balis will have to be sold next year to earn the same net operating income, $109,000, as last yeart? b. Assume the new plant is buit and that next year the compeny manufoctures and selis 32.000 balis (the same number as sold last yean Prepare a contrbution format income storement and compute the degree of operatng leverage. Compute (a) last year's CM ratio and the break-even point in balls, and (b) the degree of operating leverage at last year's sales level. (Round "Unit sales to break even" to the nearest whole unit and other answers to 2 decimal places.) Due to an increase in labor rates, the company estimates that next year's variable expenses will increase by $3.00 per ball. If this change takes place and the selling price per ball remains constant at $25.00, what will be next year's CM ratio and the break-even point in balls? (Round "CM ratio" to 2 decimal places and "Unit sales to break even" to the nearest whole unit.) Refer to the data in (2) above. If the expected change in variable expenses takes place, how many balls will have to be sold next year to earn the same net operating income, $109,000, as last year? (Round your answer to the nearest whole unit.) Refer again to the data in (2) above. The president feels that the company must raise the selling price of its basketballs. If Northwood Company wants to maintain the same CM ratio as last year (as computed in requirement 1a), what selling price per ball must it charge next year to cover the increased labor costs? (Round your answer to 2 decimal places.) Refer to the original data. The company is discussing the construction of a new, automated manufacturing plant. The new plant would slash variable expenses per ball by 40.00%, but it would cause fixed expenses per year to double. If the new plant is bullt, what would be the company's new CM ratio and new break-even point in balls? (Round "CM ratio" to 2 decimal places and "Unit sales to break even" to the nearest whole unit:) If the new plant is built, how many balls will have to be sold next year to earn the same net operating income, $109,000, as last year? (Round your answer to the nearest whole unit.) Assume the new plant is built and that next year the company manufactures and sells 32,000 balls (the same number as sold last year), Prepare a contribution format income statement and compute the degree of operating leverage. (Round "Degree of operating leverage" to 2 decimal places.) Feather Friends, Incorporated, distributes a high-quality wooden birchouse that sells for $120 per unit. Variable expenses are $60.00 per unit, and fixed expenses total $180,000 per year, lis 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 CMratio to determine the break-even point in dolter sales. 3. Assume this year's unit sales and total sales increase by 45.000 units and $5.400,000, 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 19% 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 s reduction in the seling price. combined with a $63,000 increase in advertising, would Increase this years unit soles by 25%. a. If the sales manager is right, what would be this year's net operoting 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 seling price. Instead, he wants to increase the sales commission by $2.40 per unit . He thinks that this move, combined wht some increase in advertising, would increase this year's unit sales by 25%. How much could the president inctease this year's advectising expense and still earn the same $1,320,000 net operating income as last year? What is the product's CM ratio? Use the CM ratio to determine the break-even point in dollar sales. (Do not round intermediate calculations.) Assume this year's unit sales and total sales increase by 45,000 units and $5,400,000, respectively. If the fixed expenses do not change, how much will net operating income increase? (Do not round intermediate calculations.) What is the degree of operating leverage based on last year's sales? (Round intermediate calculations and final answers to 2 decimal places.) Assume the president expects this year's unit sales to increase by 19%. 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.) The sales manager is convinced that a 13% reduction in the selling price, combined with a $63,000 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 if his ideas are implemented? (Do not round intermediate calculations.) The sales manager is convinced that a 13% reduction in the selling price, combined with a $63,000 increase in advertising, would increase this year's unit sales by 25%. If the sales manager's ideas are implemented, how much will net operating income increase or decrease over last year? (Negative amounts should be input with a minus sign.) The president does not want to change the selling price. Instead, he wants to increase the sales commission by $2.40 per unit. He thinks that this move, combined with some increase in advertising, would increase this year's unit sales by 25%. How much could the president increase this year's advertising expense and still earn the same $1,320,000 net operating income as last year? (Do not round intermediate calculations.)