How much should the net operating income increase

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Reference no: EM132559214

Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $20 per unit. Variable costs are $8 per unit, and fixed costs total $180,000 per year.

Required:

Answer the following independent questions:

Question 1. What is the product's CM ratio?

Question 2. Use the CM ratio to determine the break-even in sales dollars.

Question 3. Due to an increase in demand, the company estimates that sales will increase by $75,000 during the next year. By how much should the net operating income increase (or net loss decrease) assuming that fixed costs do not change?

Reference no: EM132559214

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