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Feather Friends, Inc., 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. Required: Answer the following independent questions 1 What is the products CM ratio? 2. Use the CM ratio to determine the break-even point in doillar sales S 400,000 3. Due to an increase in demand, the company estimates that sales wil Increase by $41.000 during the next year. By how much shouls net operating income increase (or net loss decrease) assuming that fiwed expenses do not change? $ 20,500

4. Assume that the operating results for last year were Sales Variable expenses Contribution margin Fixed expenses Net operating income S2,000,000 1,000,000 1,000,000 200,000 800,000 a Compute the degree of operating leverage at the current level of sales.(Round your answer to 2 decimal places.) 1.25 should net operating income increase? (Round intermediate calculations and final answer to 2 decimal places.) b. The president expects sales to increase by 16% next year. By what percentage 2000:%

5. Refer to the original data. Assume that the annual unit sales by 50% company sold 33,000 units last year. The sales manager e seling pre combined with a smoo in ed at a 11% reducti in ease a ensig in rease a. Prepare two contribution format income statements, one showing the results of last years operations and one showing the results of operations if these changes are made. (Do not round intermediate calculations. Round your Per unit answers to 2 decimal places.) Contribution Income Statement Last Year 33,000 units Total Per Unit Total Per Unit b. Would you recommend that the company do as the sales manager suggests? Yes O No 6. Refer to the original data. Assume again that the company sold 33,000 units last year. The president does not want to change the seling price. Instead, he wants to increase the sales commission by $t.80 per unit. He thinks that this move, combined with some increase in advertising, would double annual unit sales. By how much could advertising be increased with profits remaining unchanged? Do not prepare an income statement use the incremental analysis approach. can be i 633 PM

I need help with questions 5A and 6

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5A Proposed unit sold-33,000 + 50%-49,500 units Feather Friends Inc. Contribution Income Statement Last Year Proposed 33,000 units 49,500 units Total Per Unit Total Per Unit 3,524,400$ Sales Variable expenses Contribution Fixed Expenses Increase in Advertising 2,640,000 $ 1,320,000 1,320,000 80.00 $ 40.00 40.00 1,980,000 1,544,400 200,000 77,000 1,267,400 71.20 | (80.00-11% 40.00 31.20 200,000 Net Operating Income 1,120,000 Company should do as sales manager suggets as it will increase companys income from $ 1,120,000 to $ 1,267,4006 Advertising can be increased upto $1,201,200, so that profit will remain unchnaged Incremental Analysis Approach (President Proposal) Increase in annual unit sales Selling price per unit Increase in sales Increase in Variable expenses (33,000 40 Increase in sales commission (Note 1 Incremental Profit 33,000units 80.00 $ 2,640,000 $ 1,320,000 118,800 S 1,201,200 Advertising can be increased upto incremental profit so that profit will remain unchanged Note 1: Increase in Sales commission sales commission will increase by $1.80 per unit for all units sold Total Units sold as per proposal (double) (33000*2) Per unit increase in sales commissiorn Total Increase in sales commission 66000 118800If Advertising increases by $1,201,200 Income Statement Unit sold Total Sales (66000*80) Variable expenses (66000 40) Increase in sales commission Contribution Fixed expenses Increase in advertising Net operating Income 66000 units $ 5,280,000 $ 2,640,000 118,800 $ 2,521,200 200,000 $ 1,201,200 $1,120,000 Profit will remain same.

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