Cost Accounting (15th Edition)

Published by Prentice Hall
ISBN 10: 0133428702
ISBN 13: 978-0-13342-870-4

Chapter 3 - Cost-Volume-Profit Relationships - Assignment Material - Exercises - Page 94: 3-19(2)

Answer

An 11% decrease in contribution margin will cause operating income to decline by USD 275,000 as calculated below. Revised operating income shall be USD 125,000

Work Step by Step

(W-1) Original contribution margin (10,400,000 - 7,900,000) = 2,500,000 Revised Contribution margin (2,500,000 × 89%) = 2,225,000
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