The July contribution format income statement of Doxtater Corporation appears below: I
Sales $ 564,400
Variable expenses 312,800
Contribution margin 251,600
Fixed expenses 193,800
Net operating income $ 57,800

If the company's sales increase by 19%, its net operating income should increase by about: (Round your intermediate calculations to 2 decimal places.)

a.10%
b. 83%
c.186%
d.19%

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facundobuzzetti facundobuzzetti · Answer 1 · 2020-03-27T02:54:15+01:00

Answer:

The correct answer is B.

Explanation:

Giving the following information:

Sales $ 564,400

Variable expenses 312,800

Contribution margin 251,600

Fixed expenses 193,800

Net operating income $ 57,800

First, we need to calculate the new net operating income. Then, compare it to the old one and calculate the percentual change.

Sales= 564,400*1.19= 671,636

Variable expenses= (312,800*1.19)= (372,232)

Contribution margin= 299,404

Fixed expenses= (193,800)

Net operating income= 105,604

%change= (income 1 - income 0)/income 0

%change= (105,604 - 57,800)/ 57,800= 0.827= 83%