Molina Company has provided the following information:

Which of the following statements is true,if the sales volume increases by 10%?
A)Operating income will increase by $5,800.
B)Operating income will increase by $27,100.
C)Fixed expenses will increase by $21,300.
D)Contribution margin will increase by $77,900.

Question

Molina Company has provided the following information:

Which of the following statements is true,if the sales volume increases by 10%?
A)Operating income will increase by $5,800. 
B)Operating income will increase by $27,100. 
C)Fixed expenses will increase by $21,300. 
D)Contribution margin will increase by $77,900.

Quizplus · Accepted Answer

B)
Contribution margin = $779,000 - $508,000 = $271,000
Revised sales:
 11ea8a42_4f99_de30_8b44_4325c068f151_TB5024_00 Revised variable expenses:
 11ea8a42_4f9a_0541_8b44_7dd3d7b22250_TB5024_00 Revised contribution margin:
 11ea8a42_4f9a_0542_8b44_9ba3fca5996e_TB5024_00 Effect on contribution margin:
 11ea8a42_4f9a_0543_8b44_67047a73e44f_TB5024_00

Molina Company Has Provided the Following Information