Cindy,Inc.sells a product for $10 per unit.The variable expenses are $6 per unit,and the fixed expenses total $35,000 per period.By how much will net operating income change if sales are expected to increase by $40,000?

Question

Quizplus · Accepted Answer

CM ratio = Unit contribution margin F1F1F1S1F1F1F10 Unit selling price
= ($10 per unit - $6 per unit)F1F1F1S1F1F1F10 $10 per unit
= $4 per unit F1F1F1S1F1F1F10 $10 per unit
= 0.40
Increase in net operating income = CM ratio F1F1F1S1F1F1F10 Increase in sales
= 0.40 F1F1F1S1F1F1F10 $40,000 = $16,000

Cindy,IncSells a Product for $10 Per Unit