Reference no: EM132726325
Question - 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. Its operating results for last year were as follows:
Sales $2,160,000
Variable expenses 1,080,000
Contribution margin 1,080,000
Fixed expenses 180,000
Net operating income $900,000
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. Assume this year's unit sales and total sales increase by 55,000 units and $4,400,000, 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?
4-b. Assume the president expects this year's unit sales to increase by 11%. 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 11% reduction in the selling price, combined with a $64,000 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 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 $2.00 per unit. He thinks that 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 $900,000 net operating income as last year?
Explain the relationship between team building
: Write an essay that explains the relationship between team building and a team's cohesion and then analyse the impact of good and poor team
|
Find the amount of basic earnings per share for year
: Find the amount of basic earnings per share for the year. On January 1, 2X16, Manila Co. has 100,000 outstanding ordinary shares.
|
What the entry to record the acquisition of the equipment
: Dolly's Best issued 200 shares of its $10 common stock in exchange for used packaging equipment, What the entry to record the acquisition of the equipment
|
What actions should heather take
: Cash in Hand/ Revenue Recognition, What actions should Heather take? What alternatives would you choose if you were in this situation? Why?
|
How much could the president increase this year
: How much could the president increase this year's advertising expense and still earn the same $900,000 net operating income as last year
|
Explain the nature of the loan and measurement
: Explain the nature of this loan, its measurement and if it should be disclosed as equity. A parent company has extended financial help as a low interest loan
|
What is the Depreciation Expense Value for year
: Acme Corp purchased a new machine that is expected to be used in manufacturing for 5 years for $60,000. What is the Depreciation Expense Value for year 2
|
Determine the surcharge and interest penalty due
: Depositors in the month of April 2016. It wants to settle the unpaid final withholding tax on June 10, 2017. Compute the surcharge and interest penalty due.
|
Record the transactions and events in the journal entry
: During 2018, Thomson Inc. had several transactions relating to common stock. Record the transactions and events in the journal entry
|