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Feather Frlends, Inc, distributes a high-quality wooden birdhouse that stelis for $120 per unit. Varlable expenses are $60,00 per unit, and fixed expenses total $180,000 per year. lits operating results for last year were as follows: Required: Answer each question independently based on the original dota: 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 47,000 units and $5,640,000, respectively. If the foxed expenses do not change, how much will net opereting income increase? 4-a. What is the degree of operating leverage based on last yoars sales? 4.b. Assume the president expects this year's unit sales to increase by 10% Using the degree of operating leveroge from last yeac what percentage increase in net operating income wil the company realize this year? 5. The sales manager is convinced that a 14% reduction in the seling price, combined with a $72,000 increase in advertising, woula increase this year's unit sales by 25%. a. If the sales manoper is right, what would be this yoars not operating income if his ideas are implemented? b. If the sales managers ideas are implemented, how much wi not operating income increate or decrease over last yean? 4-a. What is the degree of operating leverage based on last year's sales? 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 roalize this year? 5. The sales manager is convinced that a 14% reduction in the seling price, combined with a $72,000 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? a. If the sales manager is right, what would be this yoar's net operating income in maneger's ideas are implemented, how much will net operating income increase or decrease over lost year? 6. The president does not want to change the selling price. Instead, he wants to increase the sales commission by $2.00 per unit He 6. The president does not want to change the selling price, instead, he wants to increase the sases coles by 25%. How much could the thinks that this move, combined with some increase in adventising, would $1,260,000 net operating income as last yea

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