Question

Edmonco Company produced and sold 46,000 units of a single product last year, with the following...

Edmonco Company produced and sold 46,000 units of a single product last year, with the following results:

Sales Revenue $ 1,370,000
Manufacturing costs:
Variable 542,000
Fixed 290,000
Selling costs:
Variable 42,000
Fixed 80,000
Administrative costs:
Variable 186,000
Fixed 130,000


If Edmonco's sales revenues increase 10%, what will be the percentage increase in income before income taxes?

Business   Accounting   
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Homework Answers

Answer #1

Current $

Increase at 10%

Revised $

Sales revenue

1370000

137000

1507000

Less: Variable cost

Variable manufacturing

542000

54200

596200

Variable selling

42000

4200

46200

variable Admin

186000

18600

204600

Total variable cost

770000

77000

847000

Contribution

600000

60000

660000

Less: Fixed cost

Manufacturing

290000

0

290000

Selling

80000

0

80000

Admin

130000

0

130000

500000

500000

Net income

100000

60000

160000

percentage increase in income

(60000/100000)

60%
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