Question

Question 1 Mary Smith sells gourmet chocolate chip cookies. The results of her last month of operations are as follows: Sales revenue Cost of goods sold (all variable) Gross margin Selling expenses (20% variable) Administrative expenses (60% variable) Operating income $48,500 27,500 21,000 7,200 12,000 $1,800 (a) (b) x Your answer is incorrect. Try again. If Mary can increase sales by 10%, by how much will her operating income increase? (Round answer to 0 decimal places, e.g. 5,275.) 686 Increase in operating income $L Click if you would like to Show Work for this question: Open Show Work

Answer 1

Operating Income if sales increase by 10%
Sales Revenue	$         53,350
($48500*110%)
Cost Of Goods Sold	$         30,250
($27500*110%)
Gross Margin	$         23,100
Selling Expenses	$           7,344
[(7200*80%)+(7200*20%*110%)]
Admin Expenses
[(12000*40%)+(12000*60%*110%)]	$         12,720
Operating Income	$           3,036
Increase in operating income = $3036-1800
	=$1236