apter 2 Homework 3 Feather Friends, Inc, 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: $ 1.000,00 Sales Variable expenses Contribution margin 5. 188, M. Het operating income $ Pw 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. If this year's sales increase by $55.000 and foed expenses do not change, how much wil net operating income increase? 4-a. What is the degree of operating leverage based on last year's sales? 4-6. Assume the president expects this year's 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 that a 12% reduction in the selling price, combined with a $66,000 increase in advertising, would Increase this year's unit sales by 25% athe 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 wil 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 $180 per unit. He thinks that this move combined with some increase in advertising, would increase this year's sales by 25%. How much could the president increase this year's advertising expense and still cam the same $360.000 net operating income as last year? Type here to search o II @ DELL 5 Q E R A S D F G H K Z X C V B Z M Alt AN 3 3. If this year's sales increase by $55,000 and 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? 4-6. Assume the president expects this year's 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 that a 12% reduction in the selling price.combined with a $66,000 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 wil 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 $180 per unit. He thinks that this move.combined with some increase in advertising, would increase this year's sales by 25%. How much could the president increase this year's advertising expense and still earn the same $360,000 net operating income as last year? Complete this question by entering your answers in the tabs below. Req1 Reg2 RA 40 RSA Reaso Rego What is the product's CM ratio? CM Reg 2 > Type here to search DELL D 33 S % 3 7 W E R U P A S D F G H N C V B N M 2 Alt Alt Chapter 2 Homework 3 5 ports 3. If this year's sales increase by $55,000 and 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? 4-6. Assume the president expects this year's 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 that a 12% reduction in the selling price, combined with a $66,000 increase in advertising, would increase this year's unit sales by 254. 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 wil 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 $180 per unit. He thinks that this move.combined with some increase in advertising, would increase this year's sales by 25%. How much could the president increase this year's advertising expense and still earn the same $360,000 net operating income as last year? Print Deferences Complete this question by entering your answers in the tabs below. Reet Red Reg Reg4 Reg 40 RSA Reg Reg. Use the CM ratio to determine the break even point in dollar sales. Do not round Intermediate calculations.) Req3 ) Type here to search O DELL y ZBBA2 96 7 0 Q E R Y U A S D F G I J K N V B Z M AIR AN 3 2. If this year's sales increase by $55,000 and fixed expenses do not change, how much wil net operating Income increase? 5 pois 4-a. What is the degree of operating leverage based on last year's sales? 4-6. Assume the president expects this year's 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 that a 12% reduction in the selling price, combined with a $66.000 increase in advertising, would Increase this year's unit sales by 25% a. the sales manager is right, what would be this year's net operating income of 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 $180 per unit. He thinks that this move, combined with some increase in advertising would increase this year's sales by 25% How much could the president increase this year's advertising expense and still earn the same $360,000 net operating income as last year? References Complete this question by entering your answers in the tabs below. Req Reg2 Res Reg 40 Regs Reg 58 Reg 6 If this year's sales increase by $55,000 and fixed expenses do not change, how much will net operating income increase? Net operating income Type here to search O DELL 30 3 4 ES a Q W E R V 0 Lock A S D F G H N C V B Z M En Alt AL 3 5 Doints 3. If this year's sales increase by $55,000 and fixed expenses do not change, how much wil net operating income increase? 4a. What is the degree of operating leverage based on last year's sales? 4-b. Assume the president expects this year's 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 that a 12% reduction in the selling price, combined with a $66,000 increase in advertising, would increase this year's unit sales by 25% a. If the sales manager is tight, what would be this year's net operating income of his ideas are implemented? b. If the sales manager's ideas are implemented how much wil 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 $180 per unit. He thinks that this move, combined with some increase in advertising, would increase this year's sales by 25%. How much could the president increase this year's advertising expense and still earn the same $360,000 net operating income as last year? References Complete this question by entering your answers in the tabs below. RGB Rego RSA Hea What is the degree of operating beverage based on last year's sales? (Round intermediate calculations and finalmers to 2 decimal places) Degree of poverage Type here to search DELL 88 5 2 0 R T KOCH S D F G H B Z M Alt AN 3 3. If this year's sales increase by $55.000 and fixed expenses do not change, how much wil net operating income increase? 4-a. What is the degree of operating leverage based on last year's sales? 4.b. Assume the presklent expects this year's 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 that a 12% reduction in the selling price.combined with a $66,000 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 of his ideas are implemented? b. If the sales manager's ideas are implemented, how much wil 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 $180 per unit. He thinks that this move, combined with some increase in advertising, would increase this year's sales by 25%. How much could the president increase this year's advertising expense and still cam the same $360,000 net operating income as last year? Print References Complete this question by entering your answers in the tabs below. Reg1 Reg 2 Ree Red Reg4 Red SA Reg 58 Rego Assume the president expects this year's 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? (Round Intermediate calculations and final answer to 2 decimal places.) Next > O Type here to search DELL BB $ 5 7 Q W R T Y C A S D F G I 2 K z X C V B N M Alt apter 2 Homework 3 3. If this year's sales increase by $55,000 and fixed expenses do not change how much wil net operating income increase? 4-a. What is the degree of operating leverage based on Last year's sales? 4-b. Assume the president expects this year's 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 that a 12% reduction in the selling price, combined with a $66,000 increase in advertising would Increase this year's unit sales by 25% a. 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 wil 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 sales by 25% How much could the president increase this year's advertising expense and still earn the same $360,000 net operating income as last year? Book References Complete this question by entering your answers in the tabs below. Reg2 Req 41 Reg 40 RA Reg 58 Rego The sales manager is convinced that a 12% reduction in the selling price, combined with a $66,000 Increase in advertising would increase this year's wit sales by 25% If the sales manager is right, what would be this year's et operating income if his ideas are implemented? (Do not round intermediate calculations.) Type here to search o DELL 68 $ co 3 W 0 E R Y T P A S D D F G L C v Z C V B Z M 0 Alt AL Saved apter 2 Homework 3 3. If this year's sales increase by $55,000 and fixed expenses do not change, how much wil 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 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 that a 12% reduction in the selling price combined with a $66,000 increase in advertising, would Increase this year's unit sales by 25% a. If the sales manager is tight, 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 wil 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 $180 per unit. He thinks that this move combined with some increase in advertising, would increase this year's sales by 25. How much could the president increase this year's advertising expense and still earn the same $360,000 net operating income as last year? eos ferences Complete this question by entering your answers in the tabs below. Reg2 Real R3 Reg Reg 40 RA dos The sales manager is convinced that a 12% reduction in the selling price, combined with a $66,000 increase in advertising would increase this year's unit sales by 25 the sales manager's ideas are implemented, how much wil net operating Income increase or decrease over last year? (Negative amounts should be input with a minus siga) Type here to search DELL BB 5 LO 1 Q W E U R A S D F . G H z C V B N M AN Alt