Week 3 Assignment VitalSource Bookshelf: Manageri X b My Questions | bartleby C Sign In or Sign Up | Chegg.com i online.vitalsource.com/#/books/9781259995484/cfi/6/30!/4/2/70/2/62/2@0:46.6 n < Chapter 5 Cost-Volu... Go to Chapter 5 Cost-Volume- Profit Relationships PROBLEM 5-23 CVP Applications; Contribution Margin Ratio: Degree of Operating Leverage LO5–1, LO5–3, LO5–4, LO5-5, LO5-8 Feather Friends, Inc., đistributes a high-quality wooden birdhouse that sells for $20 per unit. Variable expenses are $8 per unit, and fixed expenses total $180,000 per year. Its operating results for last year were as follows: 2 Searcheview Problem: CVP Sales $400,000 Relationships Variable expenses 160,000 Contribution margin. 240,000 224 Glossary Fixed expenses 180,000 Net operating income $ 60,000 224 Questions Required: Answer each question indepenđently based on the original data: 1. What is the product's CM ratio? 224 Applying Excel

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#5 -23 1. What is the product’s CM ratio?

A Week 3 Assignment
1 VitalSource Bookshelf: Manageria X
b My Questions | bartleby
C Sign In or Sign Up | Chegg.com x
A online.vitalsource.com/#/books/9781259995484/cfi/6/30!/4/2/70/2/62/2@0:46.6
A < Chapter 5 Cost-Volu...
Go to Chapter 5 Cost-Volume-
Profit Relationships
PROBLEM 5-23 CVP Applications; Contribution Margin Ratio: Degree of Operating Leverage LO5-1, LO5-3, LO5-4, LO5-5, LO5-8
Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $20 per unit. Variable expenses are $8 per unit, and fixed expenses total $180,000
per year. Its operating results for last year were as follows:
Search eview Problem: CVP
Sales
$400,000
221
Relationships
Variable expenses
160,000
Contribution margin
240,000
Glossary
224
Fixed expenses
180.000
Net operating income
$ 60,000
224
Questions
Required:
Answer each question independently based on the original data:
Applying Excel
224
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 S$75,000 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?
b. Assume the president expects this year's sales to increase by 20%. 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 10% reduction in the selling price, combined with a S30,000 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? Do you
recommend implementing the sales manager's suggestions? Why?
6. The president does not want to change the selling price. Instead, he wants to increase the sales commission by S1 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 S60,000 net operating income as last year?
226
The Foundational 15
227
Exercises
232
Problems
239
Cases
Appendix 5A: Analyzing Mixed
241
Costs 241
00
249
Glossary (Appendix 5A)
Appendix 5A: Exercises and
O 249
Problems
PROBLEM 5-24 Break-Even and Target Profit Analysis LO5-5, LO5-6
7:10 PM
P Type here to search
10/10/2020
!
Transcribed Image Text:A Week 3 Assignment 1 VitalSource Bookshelf: Manageria X b My Questions | bartleby C Sign In or Sign Up | Chegg.com x A online.vitalsource.com/#/books/9781259995484/cfi/6/30!/4/2/70/2/62/2@0:46.6 A < Chapter 5 Cost-Volu... Go to Chapter 5 Cost-Volume- Profit Relationships PROBLEM 5-23 CVP Applications; Contribution Margin Ratio: Degree of Operating Leverage LO5-1, LO5-3, LO5-4, LO5-5, LO5-8 Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $20 per unit. Variable expenses are $8 per unit, and fixed expenses total $180,000 per year. Its operating results for last year were as follows: Search eview Problem: CVP Sales $400,000 221 Relationships Variable expenses 160,000 Contribution margin 240,000 Glossary 224 Fixed expenses 180.000 Net operating income $ 60,000 224 Questions Required: Answer each question independently based on the original data: Applying Excel 224 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 S$75,000 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? b. Assume the president expects this year's sales to increase by 20%. 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 10% reduction in the selling price, combined with a S30,000 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? Do you recommend implementing the sales manager's suggestions? Why? 6. The president does not want to change the selling price. Instead, he wants to increase the sales commission by S1 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 S60,000 net operating income as last year? 226 The Foundational 15 227 Exercises 232 Problems 239 Cases Appendix 5A: Analyzing Mixed 241 Costs 241 00 249 Glossary (Appendix 5A) Appendix 5A: Exercises and O 249 Problems PROBLEM 5-24 Break-Even and Target Profit Analysis LO5-5, LO5-6 7:10 PM P Type here to search 10/10/2020 !
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