Question

Consider each case​ separately: 1. a. What is the current annual operating​ income? b. What is the current breakeven point in​ revenues? Compute the new operating income for each of the following​ changes: 2. A ​$0.08 per unit increase in variable costs 3. A 10​% increase in fixed costs and a 10​% increase in units sold 4. A 20​% decrease in fixed​ costs, a 20​% decrease in selling​ price, a 30​% decrease in variable cost per​ unit, and a 35​% increase in units sold Compute the new breakeven point in units for each of the following​ changes: 5. A 10​% increase in fixed costs 6. A 10​% increase in selling price and a $ 30 comma 000 increase in fixed costs

Answer 1

Instructions are listed below

Step-by-step explanation:

We don't have enough information to answer the question numerically. But, I can provide a few formulas of how to answer it.

A)

Revenue/Sales (+)

Cost of Goods Sold (COGS) (-)

=Gross Profit

Marketing, Advertising, and Promotion Expenses (-)

General and Administrative (G&A) Expenses (-)

=Net operating income

B)Break-even point (dollars) fixed costs/ contribution margin ratio

Contribution margin ratio= (Price - unitary variable cost)/Price

1) Increase in Unitary variable cost:

Contribution margin= price - new unitary variable cost

2) Variance in income= new sales* contribution margin - increase in fixed costs

3) Prepare the income statement again

C) Break-even point= fixed costs/ contribution margin