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Feather friends, incorporated, distributes a high-quality wooden birdhouse that sells for $20 per unit. Variable expenses are $8 per unit, and fixed expenses total $180,000 per year. Its operating results for last year were as follows: sales $ 400,000 variable expenses 160,000 contribution margin 240,000 fixed expenses 180,000 net operating income $ 60,000.

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The product's CM ratio is the contribution margin divided by the sales. The contribution margin is $240,000 and the sales are $400,000. So the CM ratio is 0.6 or 60%.

The debt-to-equity ratio (D/E) is a financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets. The debt-to-equity ratio is also known as the debt-to-capital ratio.

2. What is the break-even point in units?

The break-even point in units is the total fixed expenses divided by the contribution margin per unit. The total fixed expenses are $180,000 and the contribution margin per unit is $20. So the break-even point in units is 9,000 units.

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complete question:

Feather friends, incorporated, distributes a high-quality wooden birdhouse that sells for $20 per unit. Variable expenses are $8 per unit, and fixed expenses total $180,000 per year. Its operating results for last year were as follows: sales $ 400,000 variable expenses 160,000 contribution margin 240,000 fixed expenses 180,000 net operating income $ 60,000. Answer each question independently based on the original data: 1. What is the product's CM ratio?

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