Question

The following information is for Gable, Inc. and Harlowe, Inc. for the recent year. Gable, Inc. Harlowe, Inc.Sales$800,000 $800,000 Variable costs 400,000 200,000 Contribution margin 400,000 600,000 Fixed costs 200,000 400,000 Income from operations$200,000 $200,000 What total amount of net income will Harlowe, Inc. earn if it experiences a 10 percent increase in revenue

Answer 1

Total amount of net income is $260,000.

Step-by-step explanation:

Sales revenue

-

Variable cost

=

Contribution margin

-

Fixed cost

=

Operating/Net income.

Operating income is therefore

Sales revenue $800,000 × 1.10 #

$880,000

-

Variable cost $200,000 × 1.10 $220,000

=

Contribution margin

$660,000

-

Fixed cost

$400,00

=$260,000.

Total net income cost is $260,000