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Data pertaining the ABC Company is presented in the table below. ABC Company pro

ID: 2559499 • Letter: D

Question

Data pertaining the ABC Company is presented in the table below. ABC Company produces and sells a single product.

Fixed expenses are $344,000 per month. The company is currently selling 3,900 units per month.

What should be the overall effect on the company's monthly net operating income of this change? (Negative amount should be indicated by a minus sign. Omit the "$" sign in your response.)

Per Unit Percent of Sales   Selling price $ 180   100%   Variable expenses 54   30%   Contribution margin $ 126   70%

Explanation / Answer

Sales (3900 units, 4030 units × $180) . .................... $702000                         $725400

Variable expenses

(3900 units × $54, 4030 units × $54). ..................      210600                           217620

Contribution margin . ............................................... 491400                           507780

Fixed expenses . .........................................................344000                            344000

Net operating income . ............................................... 147400                        163780

Increase in net operating income: 163780 - 147400 = $16380