Assume the president expects this year's unit sales to increase by $12\%.$ 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 $11\%$ reduction in the selling price, combined with a $$69,000$ 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?

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 $$2\mathrm{.}20$ per unit. He thinks this move, combined with some increase in advertising, would increase this year's unit sales by $25\%.$ How much could the president increase this year's advertising expense and still earn the same $$820,000$ net operating income as last year

What is the product's CM ratio?

$2.$ Use the CM ratio to determine the break$-$even point in dollar sales.

$3.$ Assume this years unit sales and total sales increase by $54,000$ units and $$4,320,000,$ 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?

 

Answer rating: 100% (QA)

Answer 5 To calculate the percentage increase in net operating income based on a 12 increase in unit ... View the full answer