Question

Prince Paper has budgeted the following amounts for its next fiscal​ year: Total fixed expenses $ 600 comma 000 Selling price per unit $ 70 Variable expenses per unit $ 45 If Price Paper spends an additional $ 12 comma 300 on​ advertising, sales volume should increase by 3 comma 000 units. What effect will this have on operating​ income?

Answer 1

Operating​ income will increase by $63,000

Step-by-step explanation:

Given:

Sales volume increase = 3,000 units

Particular Amount

Increase in Sales $210,000 ($70×3000)

Less: Increase in Variable cost $135,000 ($45×3000)

Less: Increase additional Costs $12,000

Chane in Net operating​ Income $63,000

Operating​ income will increase by $63,000