Kelsay Corporation has provided the following contribution format income statement. All questions concern situations that are within the relevant range.

-If the company increases its unit sales volume by 4% without increasing its fixed expenses,then total net operating income should be closest to:
A) $12,240
B) $318,240
C) $360,400
D) $311,973

Question

Kelsay Corporation has provided the following contribution format income statement. All questions concern situations that are within the relevant range.
 
-If the company increases its unit sales volume by 4% without increasing its fixed expenses,then total net operating income should be closest to:
A) $12,240 
B) $318,240 
C) $360,400 
D) $311,973

Quizplus · Accepted Answer

Unit sales = 680,000 units × 1.04 = 707,200 units
Unit selling price = $2,788,000 ÷ 680,000 units = $4.10 per unit
Variable manufacturing expense per unit = $1,156,000 ÷ 680,000 units = $1.70 per unit
Variable selling and administrative expense per unit = $272,000 ÷ 680,000 units = $0.40 per unit
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Kelsay Corporation Has Provided the Following Contribution Format Income Statement