Total fixed expenses $1.000 Problem: 1 Woodley Corporation management has budgeted the following amounts for its next fiscal year: $500,000 Sale price per unit Variable expenses per unit|5600 Requirements: 1. If Woodley Corporation can reduce fixed expenses by $20,000, how will break-even sales in units be affected? 2. If Woodley Corporation spends an additional S15,000 on advertising, sales volume should increase by 1,000 units. What effect will this have on operating income? 3. If Woodley Corporation can reduce fixed expenses by $50,000, by how much can variable expenses per unit increase and still allow the company to maintain the original break-even sales in units? 4. If fixed expenses increase by 20%, to maintain the original break-even sales in units, what would be the sale price per unit have to be? Problem: 2 Happy Feet hiking socks have variable cost of $6 per pair which are then sold for $10 per pair. Monthly fixed costs are $18,000; current sales are 12,000 pairs per month. Required: 1. Compute the break-even sales in units. 2. Compute ABC's margin of safety in units and sales dollars. 3. Compute ABC's margin of safety as a percentage. 4. Compute ABC's operating leverage factor. 5. Compute ABC's % of operating income decline if sales fall by 20%. Note: You have to submit in the Moodle site in any format (word, pdf or hand written scanned copy)