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oltar Company manufactures cordless telephone for high electromagnetic radiation environments. The company's contribution format income statement for the most recent year is given below and sells a Descri | Total | Per Unit ! %ofSales 50 100.00 Sales (20,000 units 1,000,000 Variable Expenses Contribution Margin 300,000 15 Fixed Net Operating Income A. Computer the company's CM Ratio and Variable Expense Ratio B. Computer the company's break-even point in both unit sales and dollar sales. You MUST use the equation method and you MUST show all your work. C. Assume the sales increase by $400,000 next year, If the cost behavior patterns remain unchanged, by Use the CM ratio to compute your answer how much will the company's net operating income increase? and show all your work. D. Refer to the original data. Assume next year management wants the company to earn a profit of at least $100,000. How many units will have to be sold to earn this target profit? Show all your work. E. Refer to the original data. Computer the company's margin of safety in both dollars and percentage form. F. Please do the following: 1) Compute the company's degree of operating leverage at the present levels of sales. 2) Assume that through a more intense effort by the sales staff, the company sales increase by 8% next year. By what percentage would you expect net operating income to increase? Use the degree of operating leverage obtain your answer Verify your answer to (b) by preparing a new contribution format i increase in sales. income statement showing an 3) Refer to the original data. In an effort to increase sales and profits, management is considering the use of a higher-quality speaker. The higher quality speaker would increase variable costs by $3 per unit, but ment could eliminate one quality inspector who is paid a salary of $75,000 per year. The sales manage manager a) Assuming that charges are made as described above, prepare a projected contribution format b) Computer the company's new break-even point in both unit sales and dollar sales. Use the e) Would you recommend the changes be made? Why or Why Not? estimates that the higher-quality speaker would increase sales by at least 20%. income statement for next year. Show all data on a total, per unit and percentage basis formula method and show all your work. Degree of Operating Leverage % Increase in Sales A) Compute the company's CM Ratio and Variable Expense Ratio Compute the company's break-even point in both unit sales and dollar sales. You MUST use the equation od and you MUST show all your work

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