Revenues.....................................................$160,000 Cost of Go

Question

Revenues.....................................................$160,000
Cost of Goods sold($16,000+$3.20/unit)..................$80,000
Gross Profit...................................................$80,000
Operating expenses
Selling ($4,500+$1.40/unit)..............................$32,500
Administration($7,500+$1.00/unit).....................$27,500
Operating Income...........................................$20,000


D.) Refer to your answer in part A when total revenues were $160,000. Calculate the firm's operating income (or loss) if unit selling price and variable expenses do not change, and total revenues.

1.) Increase by $18,000
2.) Decrease by $12,000

Answer A to help in answering Part D.

Revenues $160,000.00
Variable Costs $148,000.00
Cost of Goods Sold 80,000-16,000 $64,000.00
Selling 32,500-4,500 $28,000.00
Administration 27,500-7,500 $20,000.00
Total Variable Costs $112,000.00
Contribution Margin $48,000.00

Explanation / Answer

1.) Operating Income increases by $2250 2.) Operating Income Increases by $1500

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