Assume the following information: Amount Per Unit Sales $ 600,000 $ 40 Contribution margin $ 360,000...
Assume the following information:
| Amount | Per Unit | |||||||
| Sales | $ | 600,000 | $ | 40 | ||||
| Contribution margin | $ | 360,000 | $ | 24 | ||||
| Net operating income | $ | 240,000 | ||||||
If the selling price per unit increases by 6% and unit sales drop
by 4%, then the best of estimate of the new net operating income
is:
Homework Answers
Current sales=($600,000/40)=15000 units
Hence new sales=(15000*(1-0.04)=14400 units
Contribution margin-Fixed cost=Net operating income
Fixed cost=(360,000-240,000)=$120,000
| Sales (40*1.06)*14400 | 610560 |
| Variable expenses(14400*24) | 345600 |
| Contribution margin | 264960 |
| Fixed expenses | 120,000 |
| Net operating income | $144960 |
NOTE:Total fixed costs and variable cost per unit do not change with change in units
Add Answer to:
Assume the following information:
Amount
Per Unit
Sales
$
600,000
$
40
Contribution margin
$
360,000...
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4.If sales increase to 1,001 units, what would be the increase
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5.If sales decline to 900 units, what would be the net
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2.What is the contribution margin ratio?
3.What is the variable expense ratio?
4.If sales increase to 1,001 units, what would be the increase
in net operating income?
5.If sales decline to 900 units, what would be the net
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sales volume decreases by 100 units, what would be the net
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