Answer:
$21,000
Explanation:
Calculation for What should be the overall effect on the company's monthly net operating income of this change
7,000 units 8,000 units
Sales $1,540,000 $1,616,000
(7,000 units × $220) (8,000 units × $202)
(7,000 units+1,000 units=8,000 units)
Variable expenses 308,000 352,000
(7,000 units × $44) (8,000 units× $44)
Contribution margin 1,232,000 1,264,000
($1,540,000-308,000) ($1,616,000-352,000)
Fixed expenses 901,000 954,000
(901,000+52,000=954,000)
Net operating income $331,000$310,000
Therefore the Decrease in net operating income will be :
Decrease in net operating income=$331,000 − $310,000
Decrease in net operating income = $21,000
