#2 5-23 Use the CM ratio to determine the break-even point in dollar sales. A Week 3 Assignment1 VitalSource Bookshelf: Manageria Xb My Questions | bartlebyC Sign In or Sign Up | Chegg.com xA online.vitalsource.com/#/books/9781259995484/cfi/6/30!/4/2/70/2/62/2@0:46.6A < Chapter 5 Cost-Volu...Go to Chapter 5 Cost-Volume-Profit RelationshipsPROBLEM 5-23 CVP Applications; Contribution Margin Ratio: Degree of Operating Leverage LO5-1, LO5-3, LO5-4, LO5-5, LO5-8Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $20 per unit. Variable expenses are $8 per unit, and fixed expenses total $180,000per year. Its operating results for last year were as follows:Search eview Problem: CVPSales$400,000221RelationshipsVariable expenses160,000Contribution margin240,000Glossary224Fixed expenses180.000Net operating income$ 60,000224QuestionsRequired:Answer each question independently based on the original data:Applying Excel2241. 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 percentageincrease 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 thisyear'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 yourecommend 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 thismove, combined with some increase in advertising, would increase this year's sales by 25%. How much could the president increase thisyear's advertising expense and still earn the same S60,000 net operating income as last year?226The Foundational 15227Exercises232Problems239CasesAppendix 5A: Analyzing Mixed241Costs 24100249Glossary (Appendix 5A)Appendix 5A: Exercises andO 249ProblemsPROBLEM 5-24 Break-Even and Target Profit Analysis LO5-5, LO5-67:10 PMP Type here to search10/10/2020!

Contribution Margin: Here you can see that contribution margin is the residual after variable costs…

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: Sales. $400,000 Variable expenses . 160,000 Contribution margin . 240,000 Fixed expenses. 180,000 Net operating income . $ 60,000 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.

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: Sales. $400,000 Variable expenses . 160,000 Contribution margin . 240,000 Fixed expenses. 180,000 Net operating income . $ 60,000 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.

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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Compute the break-even point in sales dollars for the company as a whole and the margin of safety in both dollars and percentage of sales.
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