Question

6. If the selling price increases by $2 per unit and the sales volume decreases by 100 units, what would be the net operating income

Answer 1

Answer: $2,430

Step-by-step explanation:

Sales were based on a volume of 1,000 units.

Previous sales price = 105,000/1,000 = $105

Previous Sales volume = 100

Variable expenses = 73,500/1,000 = $73.50

New sales volume = 1,000 - 100 = 900

New sales price = 105 + 2 = $107

Net Operating Income = Sales - Varible Costs - Fixed costs

= (900 * 107) - ( 73.50 * 900) - 27,720

= 96,300 - 66,150 - 27,720

= $2,430