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Given the following contribution margin income statement Sales (15000 units 35 $/units)                            

Given the following contribution margin income statement

Sales (15000 units 35 $/units)                                            525,000

Variable cost:

                Production       22.5   $/unit                       337,500

               Selling expenses   1.5 $/unit                 22,500                 360,000

Contribution margin                                                                             165,000

Fixed cost

Manufacturing                                                             55,000

Selling and administrative                                        78,000        133,000

Net operating income                                                                      32,000

What is the effect on the NOI in the following Scenarios?

  1. An increase in selling VC by 30% per unit.
  2. Decreasing the selling price to 34.5 and generating 1500 more sold units
  3. Modifying the machine that would cost an extra $40,000 in manufacturing overhead meanwhile improving the efficiency and reducing the production variable cost by $2.5 unit.
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