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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 $240,000 per year. a) What is the company's CM ratio? Please make sure your final answer(s) are in percentage form and are accurate to the nearest whole percent. (For example: 12%) CM ratio= % b) Use the CM ratio to determine the break-even point in sales dollars. Please make sure your final answer(s) are accurate to the nearest whole number. Break-even point = $ c) Due to an increase in demand, the company estimates that sales will increase by $80,000 during the next year. By how much should operating income increase assuming that fixed costs do not change? Please make sure your final answer(s) are accurate to the mearest whole number. Operating income increases by $

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 $240,000 per year. a) What is the company's CM ratio? Please make sure your final answer(s) are in percentage form and are accurate to the nearest whole percent. (For example: 12%) CM ratio= % b) Use the CM ratio to determine the break-even point in sales dollars. Please make sure your final answer(s) are accurate to the nearest whole number. Break-even point = $ c) Due to an increase in demand, the company estimates that sales will increase by $80,000 during the next year. By how much should operating income increase assuming that fixed costs do not change? Please make sure your final answer(s) are accurate to the mearest whole number. Operating income increases by $

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 $240,000 per year. a) What is the company's CM ratio? Please make sure your final answer(s) are in percentage form and are accurate to the nearest whole percent. (For example: 12%) CM ratio= % b) Use the CM ratio to determine the break-even point in sales dollars. Please make sure your final answer(s) are accurate to the nearest whole number. Break-even point = $ c) Due to an increase in demand, the company estimates that sales will increase by $80,000 during the next year. By how much should operating income increase assuming that fixed costs do not change? Please make sure your final answer(s) are accurate to the nearest whole number. Operating income increases by $ Answer (d) -(e) assuming that the operating results for last year were: Sales Variable expenses. Contribution margin. Fixed expenses. Operating income. $540,000 216,000 324,000 240,000 $84,000 d) Compute the degree of operating leverage at the current level of sales. Please make sure your final answer(s) are accurate to 2 decimal places. Degree of operating leverage = e) The president expects sales to increase by 30% next year. By what percentage should operating income increase? Please make sure your final answer(s) are in percentage form and are accurate to the nearest whole percent. (For example: 12%) Operating income increases by %
Transcribed Image Text: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 $240,000 per year. a) What is the company's CM ratio? Please make sure your final answer(s) are in percentage form and are accurate to the nearest whole percent. (For example: 12%) CM ratio= % b) Use the CM ratio to determine the break-even point in sales dollars. Please make sure your final answer(s) are accurate to the nearest whole number. Break-even point = $ c) Due to an increase in demand, the company estimates that sales will increase by $80,000 during the next year. By how much should operating income increase assuming that fixed costs do not change? Please make sure your final answer(s) are accurate to the nearest whole number. Operating income increases by $ Answer (d) -(e) assuming that the operating results for last year were: Sales Variable expenses. Contribution margin. Fixed expenses. Operating income. $540,000 216,000 324,000 240,000 $84,000 d) Compute the degree of operating leverage at the current level of sales. Please make sure your final answer(s) are accurate to 2 decimal places. Degree of operating leverage = e) The president expects sales to increase by 30% next year. By what percentage should operating income increase? Please make sure your final answer(s) are in percentage form and are accurate to the nearest whole percent. (For example: 12%) Operating income increases by %
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