Managerial Accounting (15th Edition)

Published by McGraw-Hill Education
ISBN 10: 007802563X
ISBN 13: 978-0-07802-563-1

Chapter 5 - Cost-Volume-Profit Relationships - Exercises: Exercise 5-1

Answer

Answer (1) Net operating Income (W-1) \$16500 Answer (2) Net operating Income (W-2) \$13500 Answer (3) Net operating Income (W-3) \$0

Work Step by Step

(W-1) When the Sales volume increased by 100 units (from 10000 units to 10100) Sales (10100*\$35) \$353500 Less: Variable cost (10100*\$20) -\$202000 =Contribution Margin \$151500 Less: Fixed Expenses -\$135000 =Net Operating Income \$16500 (W-2) When the Sales volume Decreased by 100 units (from 10000 units to 9900) Sales (9900*\$35) \$346500 Less: Variable cost (9900*\$20) -\$198000 =Contribution Margin \$148500 Less: Fixed Expenses -\$135000 =Net Operating Income \$13500 (W-2) When the Sales volume 9000 units Sales (9000*\$35) \$315000 Less: Variable cost (9000*\$20) -\$180000 =Contribution Margin \$135000 Less: Fixed Expenses -\$135000 =Net Operating Income \$0
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