For the following questions, circle the best response.
Zona Company’s income statement for 2010 for Brands A and Z and for the company as a whole follows:
| Total | Brand A | Brand Z |
Sales | $450,000 | $250,000 | $200,000 |
Variable expenses | (322,000) | (160,000) | (162,000) |
Contribution margin | $128,000 | 90,000 | 38,000 |
Direct fixed expenses | (53,000) | (22,000) | (31,000) |
Segment margin | $ 75,000 | $ 68,000 | $ 7,000 |
Common fixed expenses | (45,000) |
|
|
Operating Income | $ 30,000 |
|
|
If Brand Z’s sales increase by $25,000 and its direct fixed expenses increase by $3,000, operating income for the company as a whole would increase by
a. $875.
b. $1,167.
c. $1,750.
d. $4,167.
e. $1,900.
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