Answer:
d. $88,000
Explanation:
In 2020, Merkel company's
Revenue = $2,600,000
Cost = $2,100,000
Operating profits = Revenue - Cost
= $2,600,000 - $2,100,000
= $500,000
In 2021, the company's;
Revenue increases by $260,000
New revenue = $260,000 + $2,600,000 = $2,860,000
New Cost = $2,100,000 + $172,000 = $2,272,000
New Operating profits = $2,860,000 - $2,272,000
= $588,000
Expected increase in Operating profits = $588,000 - $500,000
= $88,000
The expected increase in operating profit amounts to $88,000.
