If the Northern Division's sales last year were $600,000 higher, how would this have changed Nantuor's net operating income? (Assume no change in selling prices, variable expenses per unit, or fixed expenses.)
A)$240,000 increase
B)$60,000 increase
C)$160,000 increase
D)$1,200,000 increase

Question

Quizplus · Accepted Answer

Northern Division:
CM ratio = Contribution margin ÷ Sales
= $1,200,000 ÷ $3,000,000 = 0.40
Change in contribution margin = CM ratio × Change in sales
= 0.40 × $600,000 = $240,000
Reference: CHO7-Ref40
Data for January for Bondi Corporation and its two major business segments, North and South, appear below: 11ea7998_5de0_6bbb_911b_7598e04a63fa_TB2627_00_TB2627_00 In addition, common fixed expenses totaled $179,000 and were allocated as follows: $93,000 to the North business segment and $86,000 to the South business segment.

If the Northern Division's Sales Last Year Were $600,000 Higher