If the Northern Division's sales last year were $300,000 higher, how would this have changed Nantua's net operating income? (Assume no change in selling prices, variable expenses per unit, or fixed expenses.)
A)$30,000 increase
B)$80,000 increase
C)$120,000 increase
D)$300,000 increase

Question

Quizplus · Accepted Answer

Since there is no change in selling prices, variable expenses per unit, or fixed expenses, any increase in sales revenue would flow straight to net operating income. Therefore, if the Northern Division's sales were $300,000 higher, Nantua's net operating income would also increase by $300,000.

If the Northern Division's Sales Last Year Were $300,000 Higher