Wiles Inc.'s unit selling price is $40, the unit variable costs is $30, fixed costs are $135,000, and current sales are 10,000 units.How much would operating income change if sales increase by 5,000 units?
A) $50,000 increase
B) $65,000 decrease
C) $100,000 increase
D) $50,000 decrease

Question

Quizplus · Accepted Answer

The operating income change is calculated by the contribution margin per unit times the change in units sold. The contribution margin per unit is the selling price minus the variable cost ($40 - $30 = $10). With an increase of 5,000 units, the operating income would increase by $10 * 5,000 = $50,000.

Wiles Inc'S Unit Selling Price Is $40, the Unit Variable Costs