1. Cindy, Inc. sells a product for $10 per unit. The variable expenses are $6 pe
ID: 2416640 • Letter: 1
Question
1. Cindy, Inc. sells a product for $10 per unit. The variable expenses are $6 per unit, and the fixed expenses total $35,000 per period. By what dollar amount will net operating income change if sales are expected to increase by $40,000? State your answer as positive for increase and negative for decrease.
2. Bali Corporation produces and sells a single product. Data concerning that product appear below:
The company is currently selling 2,000 units per month at $180. Variable costs per unit are $90. Fixed expenses are $131,000 per month. The marketing manager believes that an $18,000 increase in the monthly advertising budget would result in a 170 unit increase in monthly sales.
What should be the overall effect in dollars on the company's monthly net operating income of this change? State increases positive and decreases as negative.
Explanation / Answer
2
assuming units sold = 9000 SP 10 Variable cost 6 contribution per unit 4 units sold 9000 total contribution 36000 fixed cost 35000 DOL 1.03 current sales (10*9000) 90000 increase % 44.44% 1 change in operating income 45.71%Related Questions
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