Question

Variable costs as a percentage of sales for Seaside, Inc. are 75%, current sales are $600,000, and fixed costs are $110,000. How much will operating income change if sales increase by $60,000

Answer 1

$15,000 increase

Step-by-step explanation:

Calculation of How much will operating income change if sales increase by $60,000

$15,000 increase

In a situation where the variable costs is the 75% of sales, this means 75% of $60,000 will gives $45,000.

Hence,The change in sales minus variable costs will give us the change in operating income.

Change in operating income =$60,000 - $45,000 = $15,000

Therefore 15,000 increase is the amount that the operating income will change if sales increase by $60,000