Required: (Consider each case independently): 1. What would be the revised net operating income per month if the sales volume increases by 50 units? 2. What would be the revised net operating income per month if the sales volume decreases by 50 units? 3. What would be the revised net operating income per month if the sales volume is 7,800 units? [The following information applies to the questions displayed below.] Data for Hermann Corporation are shown below: Fixed expenses are $82,000 per month and the company is selling 3,500 units per month. -a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $8,700, nonthly sales volume increases by 100 units, and the total monthly sales increase by $11,000 ? -b. Should the advertising budget be increased? Complete this question by entering your answers in the tabs below. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $8,700, the monthly sales volume increases by 100 units, and the total monthly sales increase by $11,000 ? (Do not round intermediate calculations.) 2-a. Refer to the original data. How much will net operating income increase (decrease) per month if the company uses higher-quali components that increase the variable expense by $5 per unit and increase unit sales by 20%. 2-b. Should the higher-quality components be used? Complete this question by entering your answers in the tabs below. Refer to the original data. How much will net operating income increase (decrease) per month if the company uses higherquality components that increase the variable expense by $5 per unit and increase unit sales by 20%. Required: 1. What is the company's margin of safety? (Do not round intermediate calculations.) 2. What is the company's margin of safety as a percentage of its sales? (Round your percentage answer to 2 decimal places (i.e. .1234 should be entered as 12.34).) Required: 1. What is the company's degree of operating leverage? 2. Using the degree of operating leverage, estimate the impact on net operating income of a 6% increase in unit sales. 3. Construct a new contribution format income statement for the company assuming a 6% increase in unit sales. What is the company's degree of operating leverage? (Round your answer to 2 decimal places.) Degree of operating leverage Using the degree of operating leverage, estimate the impact on net operating income of a 6% increase in unit sales. (Round your intermediate calculations to 2 decimal places. Round your percentage answer to 2 decimal places (i.e .1234 should be entered as 12.34).) Construct a new contribution format income statement for the company assuming a 6% increase in unit sales. Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a imall plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball, of which 60% is direct abor cost. ast year, the company sold 32,500 of these balls, with the following results: 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 ball remains constant at $25.00, what will be next year's CM ratio and the break-even point in balls? 3. Refer to the data in requirement 2 . 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, $101,000, as last year? 4. Refer again to the data in requirement 2 . 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? 5. 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 built, what would be the company's new CM ratio and new break-even point in balls? 6. Refer to the data in requirement 5. a. If the new plant is built, how many balls will have to be sold next year to earn the same net operating income, $101,000, as last year? b. Assume the new plant is built and that next year the company manufactures and sells 32,500 balls (the same number as sold last year). Prepare a contribution format income statement and compute the degree of operating 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" up 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 round "Unit sales to break even" up to the nearest whole unit.) Show less Refer to the data in requirement 2 . 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, $101,000, as last year? (Round your answer up to the nearest whole unit.) Refer again to the data in requirement 2 . 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 built, what would be the company's new CM ratio and new break-even point in balls? (Round "CM ratio" to 2 decimal places and round "Unit sales to break even" up to the nearest whole unit.) Refer to the data in requirement 5 . If the new plant is built, how many balls will have to be sold next year to earn the same net operating income, $101,000, as last year? (Round your answer up to the nearest whole unit.) Refer to the data in requirement 5 . Assume the new plant is built and that next year the company manufactures and sells 32,500 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.) The Cheyenne Hotel in Big Sky, Montana, has accumulated records of the total electrical costs of the hotel and the number of occupancy-days over the last year. An occupancy-day represents a room rented for one day. The hotel's business is highly seasonal, with peaks occurring during the ski season and in the summer. 1. Using the high-low method, estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy-day. (Do not round your intermediate calculations. Round your Variable cost answer to 2 decimal places and Fixed cost element answer to nearest whole dollar amount.) 2. What other factors in addition to occupancy-days are likely to affect the variation in electrical costs from month to month? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) Systematic factors like guests, switching off fans and lights. ? Number of days present in a month. Income taxes paid on hotel income. Seasonal factors like winter or summer. Fixed salary paid to hotel receptionist