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Business, 25.02.2020 21:21 hgg44137

Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $40 per unit. Variable expenses are $20.00 per unit, and fixed expenses total $180,000 per year. Its operating results for last year were as follows:

Sales $1,080,000
Variable expenses 540,000
Contribution margin 540,000
Fixed expenses 180,000
Net operating income $360,000

(a) Compute the degree of operating leverage at the current level of sales. (Round your answer to 2 decimal places.)
(b) The president expects sales to increase by 10% next year. By what percentage should net operating income increase? (Round intermediate calculations and final answer to 2 decimal places.)

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