A tile manufacturer has supplied the following data: If the company increases its unit sales volume by 5% without increasing its fixed expenses, then total net operating income should be closest to:

Question

A tile manufacturer has supplied the following data:  If the company increases its unit sales volume by 5% without increasing its fixed expenses, then total net operating income should be closest to:

Quizplus · Accepted Answer

Unit sales = 580, 000 units × 1.05 = 609, 000 units
Unit selling price = $2, 842, 000 ÷ 580, 000 units = $4.90 per unit
Variable manufacturing expense per unit = $1, 653, 000 ÷ 580, 000 units = $2.85 per unit
Variable selling and administrative expense per unit = $145, 000 ÷ 580, 000 units = $0.25 per unit
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A Tile Manufacturer Has Supplied the Following Data: If