Stratford Company distributes a lightweight lawn chair that sells for $20 per unit. Variable experises are 25% of sailes, and fixed expenses total $427.500 annually. Required: Answer the following independent questions: 1. What is the product's CM per unit? Answer is complete and correct. 2. Use the CM per unif to determine the break-even point in units. 3. The company estimates that sales will increase by $95,000 during the coming year due to increased demand By how much should net operating income increase? Answer is complete but not entirely correct. 4. Assume that the operating results for last year were as follows: o. Compute the degree of operating leverage at the current level of sales. (Round your answer to 1 docimol ploce.) 5-b. Would you recommerid that the company do as the sales manager suggests? Yes No 6. Refer to the original data. Assume ogain that the company sold 40,000 units last year. The president feels that it would be unwise to change the selling price. Instead, she wants to increase the sales commission by $2 per unit. She thinks that this move, combined with some increase in advertising. would double annual unit sales. By how much could advertising be increased with profits remaining unchanged? Do not prepare an income statement; use the incremental analysis approach. b. The presidient expects sales to increase by 20% next yeat By how much should net operating income increase? 5-a. Refer to the original data. Aisume that the company sold 40,000 units last vear. The sales manoger is convinced that a J8 reduction in the sciling price, combined with a $148,000 increase in advertising expenditures, would increase annual unit sales by 30\% Prepare fwo contribution format incorne statements, one showing the results of last year's operations, and one showing what the results of operations would be If these changes were made, (Do not round intermediate calculations. Round "Per Unit" onswers to 2 decimal pleces.)