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tangare [24]
3 years ago
15

Variable costs as a percentage of sales for Lemon Inc. are 71%, current sales are $551,000, and fixed costs are $207,000. How mu

ch will operating income change if sales increase by $37,600? a.$10,904 increase b.$26,696 decrease c.$26,696 increase d.$10,904 decrease
Business
1 answer:
MAVERICK [17]3 years ago
7 0

Answer: a.$10,904 increase

Explanation:

Operating income before sales increase:

= Sales - Variable costs - Fixed costs

= 551,000 - (71% * 551,000) - 207,000

= -$47,210

Operating income after sales increase:

Sales increases to:

= 551,000 + 37,600

= $588,600

= 588,600 - (71% * 588,600) - 207,000

= -$36,306

Difference:

= -47,210 - (-36,306)

= Increase of $10,904

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. Determine the receivables turnover ratio and average days sales in receivables for the current year. (Use 365 days a year. Do
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Answer:

The question is incomplete, find complete question in the attached.

The receivables turnover for the current year is 9.02 times while average days sales in receivable is  41 days

Explanation:

The formula for computing receivables turnover ratio is given as:

Net credit sales/average accounts receivable,where average receivables is the opening plus closing receivables divided by two.

Net credit sales=$35,657

Average receivables =($3495+$4415)/2=$3955

Receivable turnover ratio=$35657/$3955

                                          =9.02

Average days sales in receivable=number of days in the year/receivable turnover ratio

Average days sales in receivable=365/9.02

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The average days sales in receivable implies the average number of days it takes receivables to settle their accounts

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