Answer:
D) $36,000
Explanation:
The income received from the operations of the business is known as the operating income. It is calculated after deducting all the variable and fixed overheads from the sales value.
Following is the comparative contribution income statement before and after the change in the sales value.
Company Current After Increase Change
Sales $100,000 $140,000 +40,000
Variable cost $60,000 $84,000 +24,000
Contribution margin $40,000 $56,000 +16,000
Fixed expenses $20,000 $20,000 +0
Operating income $20,000 $36,000 +16,000
Increase in Operating Income = $36,000
