Stratford Company distributes a lightweight lawn chair that sells for $15 per unit. Variable expenses are $6 per unit, and fixed expenses total $180,000 annually. Required: Answer the following independent questions: 1. What is the product's CM ratio? 2. Use the CM ratio to determine the break-even point in sales dollars. 3. The company estimates that sales will increase by $45,000 during the coming year due to increased demand. If cost behavior patterns remain unchanged, by how much will the company's net operating income increase? Use the CM ratio to compute your answer. 4. Assume that the operating results for last year were as follows: Sales Variable expenses Contribution margin Fixed expenses Not operating income $360,000 144,000 216,000 180,000 $ 35,000 a Compute the degree of operating leverage at the current level of sales. b. The president expects sales to increase by 15% next year. By how much will net operating income increase? 5. Refer to the original data. Assume that the company sold 28.000 units last year. The sales manager is convinced that a 10% reduction in the selling price, combined with a $70,000 increase in advertising expenditures, would increase annual unit sales by 50%. Prepare two contribution format income statements, one showing the results of last year's operations and one showing what the results of operations would be if these changes were made. Would you recommend that the company do as the sales manager suggests