Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall

Exercise 52

For the following questions, circle the best response. Answers are at the end of this chapter.

Use the following information for Question.

O’Brien, Inc.’s, 2010 contribution margin income statement shows the following:

Sales @ $8 per unit	$ 160,000
Less: Variable expense	(128,000)
Contribution margin	$ 32,000
Less: Fixed expenses	(44,000)
Operating income (loss)	$ (12,000)

If O’Brien, Inc.’s, advertising costs increased by $8,000, by how much would sales have to increase for the company to achieve an operating income of $6,000?

a. $66,000.

b. $96,000.

c. $102,000.

d. $130,000.

e. None of the above.