Question

A tile manufacturer had the following financial data: Boxes of tile produced and sold 240,000 Sales Revenue $1,280,000 Variable Manufacturing cost $456,000 Fixed manufacturing cost $320,000 Variable selling, general and administrative expense $156,000 Fixed selling, general and administrative expense $96,000 Net operating income $100,000 If the company increases its UNIT sales volume by 3% without increasing its fixed expenses, then total net operating income should be closest to:

Answer 1

If the company increases its UNIT sales volume by 3% without increasing its fixed expenses, then total net operating income should be closest to $272,040

Step-by-step explanation:

There should be a mis-statement of net operating income in this question

Current net operating income= Revenue $1,280,000 - Variable Manufacturing cost $456,000 - Fixed manufacturing cost $320,000 - Variable selling, general and administrative expense $156,000 - Fixed selling, general and administrative expense $96,000 = $252,000

If the company increases its UNIT sales volume by 3% without increasing its fixed expenses, the next operating income = 1.03 x (Revenue $1,280,000 - Variable Manufacturing cost $456,000 - Variable selling, general and administrative expense $156,000) - Fixed manufacturing cost $320,000 - Fixed selling, general and administrative expense $96,000 = $272,040