Answer:
Increase in operating income = $456,000
Explanation:
According to the scenario, computation of the given data are as follow:-
Operating Income Statement
Particular Existing New order Total
Current selling 25,000 5,700 30,700
Selling price per unit $185 $160
Manufacturing variable cost per unit $60 $60
Selling and administrative variable cost per unit $20 $20
Contribution margin per unit(CMPU)= $105 $80
(sale price - variable cost)
Contribution margin $2,625,000 $456,000 $3,081,000
(sale units × CMPU)
Manufacturing fixed cost $700,000 $700,000
Selling and administrative fixed cost $250,000 $250,000
Net operating income $1,675,000 $2,131,000
So, Difference in net income are as follows:
Increase in operating income = $2,131,000 - $1,675,000
= $456,000
