Homework Answers
Increase in net operating income = $30.00
Explanation:
It is given,
Contribution margin = $30,000
Sales volume = 1,000 units
Contribution margin per unit = Contribution margin / Sales
volume
= $30,000 / 1,000 = $30 per unit
Increase in sales volume = 1unit ( 1,001 - 1,000)
Increase in contribution margin = Contribution margin per unit × Increase in sales volume = $30 × 1 = $30.00
Fixed expense will always remain the same irrespective of change in sales volume. Therefore, the increase in contribution margin will be the increase in net operating income.
Increase in net operating income = $30.00
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