Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $120 per unit

Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $120 per unit.Variable expenses are $60.00 per unit, and fixed expenses total $180,000 per year.1. What is the product’s CM ratio?2. Use the CM ratio to determine the break-even point in dollar sales3. Due to an increase in demand, the company estimates that sales will increase by $43,000during the next year. By how much should net operating income increase (or net lossdecrease) assuming that fixed expenses do not change?4. Assume that the operating results for last year were: SalesVariable expensesContribution marginFixed expensesNet operating income $3,000,0001,500,0001,500,000180,000$1,320,000 A. Compute the degree of operating leverage at the current level of sales. (Round your answer to2 decimal places.)B. The president expects sales to increase by 20% next year. By what percentage should netoperating income increase? (Round intermediate calculations and final answer to 2 decimalplaces.) 5. Refer to the original data. Assume that the company sold 34,500 units last year. The salesmanager is convinced that a 11% reduction in the selling price, combined with a $76,000 increase inadvertising, would increase annual unit sales by 50%.a. Prepare two contribution format income statements, one showing the results of last year’soperations and one showing the results of operations if these changes are made. (Do not roundintermediate calculations. Round your “Per unit” answers to 2 decimal places.) b. Would you recommend that the company do as the sales manager suggests? Yes or No6. Refer to the original data. Assume again that the company sold 34,500 units last year. Thepresident does not want to change the selling price. Instead, he wants to increase the salescommission by $1.80 per unit. He thinks that this move, combined with some increase in advertising,would double annual unit sales. By how much could advertising be increased with profits remainingunchanged? Do not prepare an income statement; use the incremental analysis approach.