Question

Required information (The following information applies to the questions displayed below.) Income Statement Sales (1,898 units) Variable expenses Contribution margin Fixed expenses Net operating income 45, ose 31.500 13,500 8.640 4,860 6. If the selling price increases by $2 per unit and the sales volume decreases by 100 units, what would be the net operating income? The new sales volume is within the relevant range. Net operating income

Answer 1

per unit sales (1000units*$45) 45 45000 variable expenses 31500 31.50 contribution margin 13500 13.50 fixed expenses 8640 net operating income 4860 if selling price increased by 2 per unit and units increased by 100 sales (1100units*$47) 51700 34650 17050 8640 variable expenses contribution margin fixed expenses 8410 net operating income 6) net operating income 8410

if variable cost increased by 1, spending on advertising increased by 1350, unit sales increased by 17o 52650 sales (1170units$45) variable expenses 38025 contribution margin 14625 fixed expenses 9990 net operating income 4635 7) net operating income 4635 sales (1000units$45) 45000 31500 13500 8640 4860 variable expenses contribution margin fixed expenses net operating income 8) break even point in units 640 units =8640/31.50

45000 sales (1000units$45) variable expenses 31500 contribution margin 13500 8640 4860 fixed expenses net operating income 9) break even point in dollar sales -640*45 28800 45000 31500 sales (1000units*$45) variable expenses contribution margin 13500 8640 fixed expenses net operating income 4860 10) number of units = (target 1240 profit+fixed cost )/CM per unit sales (1000units*$45) variable expenses 45000 31500

sales (1000units*$45) 45000 variable expenses contribution margin 31500 13500 fixed expenses net operating income 11) margin of safety in dollars 8640 4860 16200 margin of safety percentage 36 % (1000units $45) 45000 variable expenses 31500 contribution margin 13500 fixed expenses 8640 net operating income 4860 12) degree of operating leverage contribution margin /operating income 2.78 ales (1000units $45) variable expenses contribution margin 45000 31500 13500 fixed expenses 8640 net operating income 4860 13) increase in net operating income-5% °2.78 13.90 %