Question

34. Coronado Industries produces flash drives for computers, which it sells for $20 each. Each flash drive costs $7 of variable costs to make. During April, 600 drives were sold. Fixed costs for April were $1800. How much does Coronado’s operating income increase for each $1000 increase in revenue per month?

a) $650.

b) $250.

c) $12000.

d) Not enough information to determine the answer.

Answer 1

Answer- Current income:-

· Requirement: Operating income increase for each $ 1000 increase in revenue = $ 650 · Working A Sale price per unit $20 B Variable cost per unit $7 C = A - B Contribution margin per unit $13 D = (C/A) x 100 Contribution margin ratio 65% E Increase in revenue per month $1,000 F = E x D Operating income would increase by $650 Answer

Hence, the correct option is a)-$650

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