Answer
An 11% increase in fixed cost shall be accounted for as specified in (N-1). On the other hand, 11% increase in units sold would cause contribution margin to increase by 11%. Consequently, the budgeted operating income for this deviation can be calculated as follows;
Work Step by Step
(N-1) 2,100,000 × 1.11 = 2,331,000
(N-2) 10,400,000 × 1.11 = 11,544,000
(N-3) 7,900,000 × 1.11 = 8,769,000
