Manseco Manufacturing had sales revenue last year of $500,000, variable manufacturing costs of $320,000, and fixed manufacturing costs of $80,000.
a) If Manseco expects sales revenue to increase by 20% for the upcoming year, with variable manufacturing costs maintaining the same percentage relationship to sales revenue as in the previous year, with the same fixed manufacturing costs, what will the expected operating income (profit) be for Manseco?
b) If Manseco instead expects sales revenue to decline by 10% for the upcoming year, with variable manufacturing costs maintaining the same percentage relationship to sales revenue as in the previous year, with the same fixed manufacturing costs, what will the expected operating income (profit) be for Manseco?

Question

Manseco Manufacturing had sales revenue last year of $500,000, variable manufacturing costs of $320,000, and fixed manufacturing costs of $80,000. 
a) If Manseco expects sales revenue to increase by 20% for the upcoming year, with variable manufacturing costs maintaining the same percentage relationship to sales revenue as in the previous year, with the same fixed manufacturing costs, what will the expected operating income (profit) be for Manseco? 
b) If Manseco instead expects sales revenue to decline by 10% for the upcoming year, with variable manufacturing costs maintaining the same percentage relationship to sales revenue as in the previous year, with the same fixed manufacturing costs, what will the expected operating income (profit) be for Manseco?

Quizplus · Accepted Answer

The Answer of Manseco Manufacturing had sales revenue last year of $500,000, variable manufacturing costs of $320,000, and fixed manufacturing costs of $80,000. 
a) If Manseco expects sales revenue to increase by 20% for the upcoming year, with variable manufacturing costs maintaining the same percentage relationship to sales revenue as in the previous year, with the same fixed manufacturing costs, what will the expected operating income (profit) be for Manseco? 
b) If Manseco instead expects sales revenue to decline by 10% for the upcoming year, with variable manufacturing costs maintaining the same percentage relationship to sales revenue as in the previous year, with the same fixed manufacturing costs, what will the expected operating income (profit) be for Manseco?

Manseco Manufacturing Had Sales Revenue Last Year of $500,000, Variable