Stratford Company distributes a lightweight lawn chair that sells for $80 per unit. Variable expenses are $40.00 per unit, and fixed expenses total $180,000 annually.

Required:
1.	What is the product's CM ratio? (Do not round intermediate calculations.)

CM ratio

%

2.	Use the CM ratio to determine the break-even point in sales dollars. (Do not round intermediate calculations. Round your answer to the nearest dollar amount. )

Break-even point in sales dollars

$

3.	The company estimates that sales will increase by $58,000 during the coming year due to increased demand. By how much should net operating income increase?

Net operating income increases by

$

5.	Refer to the original data. Assume that the company sold 31,500 units last year. The sales manager is convinced that a 11% reduction in the selling price, combined with a $62,000 increase in advertising expenditures, would increase annual unit sales by 50%.

a.	Prepare two contribution format income statements, one showing the results of last year