Question

Assume the following (1) contribution margin = $150,000 (2) net operating income = $15,000, and (3) sales increase by 8%. Giv
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Answer #1

Increase in operating income is 80%.

Contribution 150000
Operating Income 15000
Fixed Cost (Balancing Figure) 135000
Revised Contribution increase by 8% 162000
Fixed Cost 135000
Revised Operating Income 27000
Increase in Operating Income 12000
Increase in Operating Income in % 80%

Working Notes:

Note: IF Sales increase by 8%, then Contribution will also be increase by 8%.
Note: Fixed Cost remain same, irrespecive of increase in sales.
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