Answer:
1. the net income if selling price increased by 10% would be = $59,700
Net income increased by $31,500.
Explanation:
Given,
Sales = $315,000
Variable costs = $216,000
Fixed costs = $70,800
No. of units = 5,000
                                    Sheffield Company
              Income Statement (Contribution Margin Format)
Particulars                                                $
Sales                                                    315,000
Less: Variable expenses                  <u> (216,000)</u>
Contribution Margin                             99,000
Less: Fixed costs                         <u>        (70,800)</u>
Net Income                                          28,200
Since the selling price increased by 10% and no change in variable costs and volume, therefore, we can get -
<em>Sales = $315,000 x (1 + 0.10) = $346,500</em>
In this case, the net income will be as follows:
Sales                          = $346,500
<u>Less: Variable Costs =  (216,000)</u>
Contribution Margin  =   130,500
<u>Less: Fixed Costs      =   (70,800)</u>
Net Income                =   59,700