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Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $20 per unit Variable expenses are $8 per u
Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 400,000 160.000 240000 180.000 $ 60,000
€ → tomheducation.com The president expects sales to increase by 20%. next year By what percentage should stoperating incomeInformation for #5
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Answer #1
Feather Friends Inc.
Contribution Income Statement
Last Year Proposed
18000 Units 24000 Units
Particulars Total Per Unit Total Per Unit
Sales 360000 20 432000 18
(-);- Variable Exp. 144000 8 222000 9.25
Contribution Margin 216000 12 210000 8.75
(-);- Fixed Expenses 180000 180000
Net Income 36000 30000

As per Contribution Income Statement "Contribution Margin" and Net Income is Less under Proposed situation. Therefore, the proposal should not be accepted.Hence, the answer would be "NO."

Total Proposed Units = 18000 + 1/3 of 18000 = 24000 Units

Total Variable Expenses = 24000 x 8 + 30000 (increase) =$222000

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