Answer and Explanation:
Particulars Current Expected
Sales $800,000 $837000
($200 × 4,000) ($200 - $14) × (4,000 + 500)
Less:
Variable expenses $160,000 $180,000
($40 × 4,000) ($40 × 4,500)
Contribution margin $640,000 $657,000
Less:
Fixed expenses $531,000 $566,000
($531,000 + $35,000)
Net operating income $109,000 $91,000
As we can see that the net operating income is declined by $18,000 by taking a difference of current net operating income and expected net operating income
