The income statement for Symbiosis Manufacturing Company for 2016 is as follows: If sales increase by $60,000, what will happen to profit?

Question

The income statement for Symbiosis Manufacturing Company for 2016 is as follows:  If sales increase by $60,000, what will happen to profit?

Quizplus · Accepted Answer

The net profit margin for Symbiosis Manufacturing Company is 4%. Therefore, an increase in sales of $60,000 will result in an increase in net profit of 4% of $60,000 = $2,400. Therefore, profit will increase by $2,400 x 10 (since the income statement is provided for 10,000 units) = $24,000.

The Income Statement for Symbiosis Manufacturing Company for 2016 Is