Question

Christi Manufacturing provided the following information for last month:                   Sales            &

Christi Manufacturing provided the following information for last month:

                  Sales                                 $10,000

                  Variable costs                      3,000

                  Fixed costs                           5,000

                  Operating income              $2,000

         If sales double next month, what is the projected operating income?

[[selectone]]

a. $4,000

b. $7,000

c. $12,000

d. $9,000

Business   Accounting   
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Homework Answers

Answer #1

Current sales = 10,000

New sales = 10,000 x 2

= $20,000

Current Variable costs = $3,000

New variable costs = 3,000 x 2

= $6,000

No change in fixed costs.

Proposed Income Statement
Sales 20,000
Variable costs -6,000
Contribution margin 14,000
Fixed costs -5,000
Net operating income $9,000

The projected operating income = $9,000

Fourth option is correct.

Please give a positive rating if you are satisfied with this solution and if you have any query kindly ask.

Thanks!!!

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