Tyrene Products manufactures recreational equipment. One of the company's products, a skateboard, sells for $35. The skateboards are manufactured in an antiquated plant that relies heavily on direct labour workers. Thus, variable costs are high, totalling $21.00 per skateboard, of which 60% is direct labour cost.

    

Tyrene Products manufactures recreational equipment. One of the company's products, a skateboard, sellsfor $35. The skateboards are manufactured in an antiquated plant that relies heavily on direct labourworkers. Thus, variable costs are high, totalling $21.00 per skateboard, of which 60% is direct labour cost. Over the past year the company sold 41,000 skateboards, with the following operating results: Sales (41,000 skateboards) $1,435,000Variable expenses 861,000Contribution margin 574,000Fixed expenses 420,000Net operating income $ 154,000 Management is anxious to maintain and perhaps even improve its present level of income from theskateboards. Required: 1a. Compute the CM ratio and the break-even point in skateboards. (Do not round intermediatecalculations. Round your answer to the nearest whole number.) Contribution margin Unit sales to break-even point 1,050,000 skateboards 1b. Compute the degree of operating leverage at last year's level of sales. (Round your answer to 2decimal places.) 2. Due to an increase in labor rates, the company estimates that variable costs will increase by $2.80 perskateboard next year. If this change takes place and the selling price per skateboard remains constant at$35.00, what will be the new CM ratio and the new break-even point in skateboards? (Round yourintermediate calculations and the "Contribution margin" answer to 2 decimal places and otheranswer to the nearest whole number. ) Contribution margin m % Unit sales to break-even point 61 7,647 skateboards 3. Refer to the data in (2) above. If the expected change in variable costs takes place, how manyskateboards will have to be sold next year to earn the same net operating income, $154,000, as lastyear? (Do not round intermediate calculations. Round your answer to the nearest whole number.) uuuuuuuuuu? 4. Refer again to the data in (2) above. The president has decided that the company may have to raise theselling price of its skateboards. If Tyrene Products wants to maintain the same CM ratio as last year,what selling price per skateboard must it charge next year to cover the increased labor costs? (Do notround intermediate calculations. Round your answer to 2 decimal places. ) —:|