Feather Friends, Incorporated, distributes a high-quality wooden birdhouse that sells for $80 per unit. Variable expenses are $40.00per unit, and fixed expenses total $180,000 per year. Its operating results for last year were as follows:SalesVariable expensesContribution marginFixed expensesNet operating incomeRequired:Answer each question Independently based on the original data:1. What is the product's CM ratlo?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 51,000 units and $4,080,000, respectively. If the fixed expenses do notchange, 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 17%. 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 $72,000 Increase in advertising, wouldIncrease this year's unit sales by 25%.a. If the sales manager is right, what would be this year's net operating Income if his ideas are Implemented?b. If the sales manager's Ideas are Implemented, how much will net operating Income Increase or decrease over last year?$ 2,080,0001,040,0001,040,000180,000$ 860,0006. The president does not want to change the selling price. Instead, he wants to increase the sales commission by $1.80 per unit. Hethinks that this move, combined with some increase in advertising, would increase this year's unit sales by 25%. How much could thepresident Increase this year's advertising expense and still earn the same $860,000 net operating Income as last year?Complete this question by entering your answers in the tabs below.Req 1Req 2What is the product's CM ratio?CM ratio%Req 3Req 4A11Reg 4BReg 5AReq 2 >Reg 58Rea 6

Hi studentSince there are multiple sub parts, we will answer only first three sub parts. Variable…

Answered: Feather Friends, Incorporated,…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

ABC Service company provides shuttle service between four hotels near a Hospital and an international airport. ABC uses two 10-passenger vans to offer 12 round trips per day. A recent month's activity in the form of a cost-volume-profit income statement is shown below. Fare revenues (1,440 fares/units) OMR 36,000 Variable costs Fuel OMR 5,040 Tolls and parking 3,100 Maintenance 860 9,000 Contribution margin 27,000 Fixed costs Salaries 12,700 1,300 Depreciation 1,000 Insurance 15,000 OMR 12,000 Net income What is the break-even point in OMR/ dollars?
Oriole provides environmentally friendly lawn services for homeowners. Its operating costs are as follows. Depreciation $1,500 per month Advertising $100 per month Insurance $4,035 per month Weed and feed materials $17 per lawn Direct labor $3 per lawn Fuel $1 per lawn Oriole charges $70 per treatment for the average single-family lawn. (A) Determine the company’s break-even point in number of lawns serviced per month. Break-even point Type your answer here lawns (B) Determine the company’s break-even point in dollars. Break-even point $Type your answer here
Blossom provides environmentally friendly lawn services for homeowners. Its operating costs are as follows. Depreciation (straight-line) $1,500 per month Advertising $350 per month Insurance $3,610 per month Weed and feed materials $20 per lawn Direct labor $7 per lawn Fuel $1 per lawn Blossom charges $80 per treatment for the average single-family lawn. For the month ended July 31, 2022, the company had total sales of $9,600.
Feather Friends, Inc distributes a high-quality wooden birdhouse that sells for $80 per unit. Variable expenses are $40 per unit and fixed expenses total 200000 per year. Its operating results for last year were as follows: Sales 2240000 Variable expenses 1120000 Contribution Margin 1120000 Fixed Expenses 200000 Net Operating income 920000 Answer this question independently based on the original data: Assume this year's unit sales and total sales increase by 54000 units and 4320000 respectively. If the fixed expenses do not change, how much will net operating income increase?
Sheridan provides environmentally friendly lawn services for homeowners. Its operating costs are as follows. Depreciation (straight-line) $1,400 per month Advertising $250 per month $2,475 per month $17 per lawn $8 per lawn $2 per lawn Insurance Weed and feed materials Direct labor Fuel Sheridan charges $60 per treatment for the average single-family lawn. For the month ended July 31, 2022, the company had total sales of $8,400.
ABC Service company provides shuttle service between four hotels near a Hospital and an intermational airport. ABC uses two 10- passenger vans to offer 12 round trips per day. A recent month's activity in the form of a cost-volume-profit income statement is shown below. Fare revenues (1,440 fares/units) OMR 36,000 Variable costs Fuel OMR 5,040 Tolls and parking 3,100 Maintenance 860 9,000 Contribution margin 27,000 Fixed costs Salaries 12,700 1,300 Depreciation 1,000 Insurance 15,000 OMR 12,000 Net income What is the break-even point in OMR/ dollars?
Magic Realm, Incorporated, has developed a new fantasy board game. The company sold 38,000 games last year at a selling price of $61 per game. Fixed expenses associated with the game total $665,000 per year, and variable expenses are $41 per game. Production of the game is entrusted to a printing contractor. Variable expenses consist mostly of payments to this contractor. Required: 1-a. Prepare a contribution format income statement for the game last year. 1h Compute the
Engberg Company installs lawn sod in home yards. The company’s most recent monthly contribution format income statement follows: Amount Percent of Sales Sales $ 94,000 100% Variable expenses 37,600 40 Contribution margin 56,400 60% Fixed expenses 43,240 Net operating income $ 13,160 Required: 1. What is the company’s degree of operating leverage? 2. Using the degree of operating leverage, estimate the impact on net operating income of a 5% increase in unit sales. 3. Construct a new contribution format income statement for the company assuming a 5% increase in unit sales.
Magic Realm, Incorporated, developed a new fantasy board game and sold 47,500 units last year at a selling price of $66 per game. Fixed expenses associated with the game are $855,000 per year, and variable expenses are $46 per game. Production of the game was outsourced to a printing contractor, so variable expenses consist mostly of payments to this contractor. Required: 1-a. Prepare a contribution format income statement for the game last year. 1-b. Compute the degree of operating leverage. 2. Management is confident that the company can sell 61,750 games next year (an increase of 14,250 games, or 30%, over last year). Given this assumption: a. What is the expected percentage increase in net operating income for next year? b. What is the expected amount of net operating income for next year? (Do not prepare an income statement; use the degree of operating leverage to compute your answer.) Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2…
Royal Lawncare Company produces and sells two packaged products—Weedban and Greengrow. Revenue and cost information relating to the products follow: Product Weedban GreengrowSelling price per unit $ 9.00 $ 33.00Variable expenses per unit $ 2.50 $ 12.00Traceable fixed expenses per year $ 136,000 $ 41,000 Common fixed expenses in the company total $110,000 annually. Last year the company produced and sold 37,000 units of Weedban and 19,500 units of Greengrow. Required: Prepare a contribution format income statement segmented by product lines.
Radig Travel offers helicopter service from suburban towns to John F. Kennedy International Airport in New York City. Each of its fourteen helicopters makes between 1,100 and 2,200 round-trips per year. The records indicate that a helicopter that has made 1,100 round-trips in the year incurs an average operating cost of $500 per round-trip, and one that has made 2,200 round-trips in the year incurs an average operating cost of $400 per round-trip. Read the requirements LOADING... . Requirement 1. Using the high-low method, estimate the linear relationship y=a+bX, where y is the total annual operating cost of a helicopter and X is the number of round-trips it makes to JFK airport during the year. = + Requirement 2. Give examples of costs that would be included in a and in b. Begin by selecting which type of costs "a" and "b" represent, then select the costs that correlate with that cost type, use each cost only once.…
Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $40 per unit. Variable expenses are $20.00 per unit, and fixed expenses total $160,000 per year. Its operating results for last year were as follows: Sales Variable expenses Contribution margin Fixed expenses $ 1,040,000 520,000 520,000 160,000 Net operating income 360,000 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 48,000 units and $1,920,000, 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 14%. Using the degree of operating leverage from last year, what percentage increase in net operating income will the company realize…

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS