![Business](/tpl/images/cats/ekonomika.png)
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. Its operating results for last year were as follows:
Sales $ 3,000,000
Variable expenses 1,500,000
Contribution margin 1,500, 000
Fixed expenses 180, 000 1,320,000
Net operating income 1,320,000
Required:
1. 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 $51,000 and fixed expenses do not change, how much will net operating income increase?
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