Also please answer the yes or no answer! Question 5 (of 5 value 5.00 points Feat

Question

Also please answer the yes or no answer! Question 5 (of 5 value 5.00 points 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 $180,000 per year Required: Answer the following independent questions 1. What is the product's CM ratio? ratio 2 Use the CM ratio to determine the break-even point in dollar sales 3. Due to an increase in demand the company estimates that sales will increase by $53 000 duning the next year By how much should net operating income increase (or net loss decrease) assuming that fixed expenses do not change? operating income start HP Comp aq LA2205wg

Explanation / Answer

Sales Per unit = $80

VAriable expense per unit = $40

Contribution MArgin per unit = Sales per unit - VAriable cost per unit

Contribution MArgin Per unit = $80 - $40 = $40

Fixed Expense = $180000

Contribution Margin Ratio = CM per unit /Sales Price per unit

Contribution Margin Ratio = 40/80 =0.5 or 50%

2) Break even Point in sales dollar = Fixed Expense/Contribution margin ratio

Break even Point in sales dollar = 180000/50% = $360000

3) If slaes increases by $53000,The net operating income will increase by 53000x0.5 = $26500

4) Degree Of Operating Leverage = Contribution MArgin /Net Operating Income

Degree Of Operating Leverage = 1000000/820000 =1.22

4(b) The Degree of Operating Leverage = 1.22.If sales increases by 16%, the Net operating Income would increase by 1.22x16% = 19.52%

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.