Which of the following statement is correct? Internat income statements are generally prepared using varioble costing and extemal income statements are generally prepared using absorption costing. Both internal and externol income statements are generally prepared using absorpson costing. Both internal and external income stotements are generally prepared using variable costing. Internal income statements are generally prepared using absorption costing and extemal income statements are generally prepared using variable costing. Feather Friends, Incorporated, distributes a high-quality wooden birdhouse that sells for $40 per unit. Variable expenses are $20,00 per unit and fixed expenses total $180,000 per year. Its operating results for last year were as follows: Required: Answer each question independently based on the original data: 1. What is the product's CM ratio? 2. Use the CM ratio to determine the break-even point in dollar sales. 3. Assume this year's unit sales and total sales increase by 52,000 units and $2,080,000, respectively. If the fixed expenses do not change, how much will net operating income increase? 4-a. What is the degree of operating leverage based on last year's sales? 4b. Assume the president expects this year's unit sales to increase by 10%. Using the degree of operating leverage from last year. what percentoge increase in net operating income will the company realize this year? 5. The sales manager is convinced a 10% reduction in the selling price, combined with a $78,000 increase in advertising, would increase this year's unit saies by 25% a. If the sales manager is right, what would be this year's net operating income if his ideas are implemented? b. If the saies manoger's ideas are implemented, how much will net operating income increase or dectease over last year? 6. The president does not want to change the selling price, Instead, he wants to increase the sales commission by $1,90 per unit. He. thinks this move, combined with some increase in advertising. Would increase this year's unit sales by 25%. How imuch could the president incieose this year's advertising expense and stilf earn the same $320,000 net operating income as last year? 4-b. Assume the president expects this year's unit sales to increase by 10%. Using the degree of operating leverage from last year, what percentage increase in net operating income will the company realize this year? 5. The sales manager is convinced a 10% reduction in the selling price, combined with a $78,000 increase in advertising, would increase this year's unit sales by 25%. a. If the sales manager is right, what would be this year's net operating income if his ideas are implemented? b. If the sales manager's ideas are implemented, how much will net operating income increase or decrease over last year? 6. The president does not want to change the selling price. Instead, he wants to increase the sales commission by $1.90 per unit. He thinks this move, combined with some increase in advertising, would increase this year's unit sales by 25%. How much could the president increase this year's advertising expense and still earn the same $320.000 net operating income as last year? Complete this question by entering your answers in the tabs below. The sales maneger is convinced a 10% reduction in the seling price, combined with a $78,000 increase in advertising, would increase this year's unit sales by 25%. If the sales manager's ideas are implemented, how much will net operating income. increase or decreast over last year? Notei Negative amounts should be input with a minus sign. -b. Assume the president expects this year's unit sales to increase by 10%. Using the degree of operating leverage from last year, what percentage increase in net operating income will the company realize this year? 5. The sales manager is convinced a 10% reduction in the selling price, combined with a $78,000 increase in advertising. would increase this year's unit sales by 25%. a. If the sales manager is right, what would be this year's net operating income if his ideas are implemented? b. If the sales manager's ideas are implemented, how much will net operating income increase or decrease over last year? 6. The president does not want to change the selling price. Instead, he wants to increase the sales commission by $1.90 per unit. He thinks this move, combined with some increase in advertising, would increase this year's unit sales by 25%. How much could the president increase this year's advertising expense and still eam the same $320,000 net operating income as last year? Complete this question by entering your answers in the tabs below. The president does not want to change the seiling price. Instead, he wants to increase the sales commission by $1.90 per unit. He thinks this move, combined with some increase in advertising, would increase this year's unit sales by 25%. How much could the president increase this year's advertising expense and still eam the same $320,000 net operating income as last year? Note: Do not round intermediate calculations