Homework Answers
Solution:
New contribution margin per unit = $200 - ($76 + $12) = $112 per unit
Additional contribution margin on increased sales = 370*$112 = $41,440
Change in net operating income for proposed change = Additional contribution margin on increased sales + Decrease in fixed costs - (Sales commission on existing sales)
= $41,440 + $108,000 - (9700*$12)
= $33,040
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