Answer:
If the company applies the changes, income will increase by $28,500.
Explanation:
<u>First, we need to calculate the current number of units sold:</u>
Sales (dollars)= net income + fixed costs + total variable cost
Sales (dollars)= 30,000 + 90,000 + 180,000
Sales (dollars)= $300,000
Number of units= 300,000 / 15= 20,000
<u>Now, the selling price increases by 15%, and the number of units decreased by 10%:</u>
Unitary variable cost= 180,000/20,000= $9
Selling price= 15*1.15= $17.25
Number of units sold= 20,000*0.9= 18,000
Net operating income= 18,000*(17.25 - 9) - 90,000
Net operating income= $58,500
If the company applies the changes, income will increase by $28,500.
