Whirly Corporation's contribution format income statement for the most recent month is shown below: Total Per Unit Sales (9,000 units) $ 297,000 $ 33.00 Variable expenses 162,000 18.00 Contribution margin 135,000 $ 15-00 Fixed expenses 54,700 Net Operating income $ 30:300 [ Required: (Consider each case independently): 1. What would be the revised net operating income per month if the sales volume increases by 100 units? 2. What would be the revised net operating income per month if the sales volume decreases by 100 units? 3. What would be the revised net operating income per month if the sales volume is 8,000 units? n Revised net operating income $ 16,500 a Revised net operating income $ 13,500 Revised net operating income _ Feather Friends, lnc., distributes a high-quality wooden birdhouse that sells for $80 per unit. Variable expenses are $40.00 per unit, and fixed expenses total $200,000 per year. Its operating results for last year were as follows: Sales $2,000,000 Variable expenses 1 , 040 , 000 Contribution margin 1 , 040 , 000 Fixed expenses 200 , 000 Net operating income $ 840, 000 I 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 breakeven point in dollar sales. 3. Assume this year's unit sales and total sales increase by 52,000 units and $4,160,000, respectively. If the fixed expenses do not change, how much will net operating income increase? 4a. 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 19%. 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 that a 10% reduction in the selling price, combined with a $74,000 increase in advertising, would increase this year's unit sales by 25%. 5. The sales manager is convinced that a 10% reduction in the selling price, combined with a $74,000 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 $1.80 per unit. He thinks that 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 $840,000 net operating income as last year? Assume this year's unit sales and total sales increase by 52,000 units and $4,160,000, respectively. If the fixed expenses do not change, how much will net operating income increase? (Do not round intermediate calculations.) J u u II II D. ______________________ u u I The sales manager is convinced that a 10% reduction in the selling price, combined with a $74,000 increase in advertising, would increase this year's unit sales by 25%. If the sales manager is right, what would be this year's net operating income if his ideas are implemented? (Do not round intermediate calculations.) The sales manager is convinced that a 10% reduction in the selling price, combined with a $74,000 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 decrease over last year? (Negative amounts should be input with a minus sign.) ...................... I. The president does not want to change the selling price. Instead, he wants to increase the sales commission by $1.80 per unit. He thinks that 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 $840,000 net operating income as last year? (Do not round intermediate calculations.) Show IessA