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SashulF [63]
3 years ago
10

A company's current sales are $300,000 and fixed expenses total $225,000. The contribution margin ratio is 30%. The company has

decided to expand production which is expected to increase sales by $70,000 and fixed expenses by $15,000. If these results occur, net operating income will ______. Multiple choice question. increase by $6,000 decrease by $27,000 increase by $21,000 decrease by $15,000
Business
1 answer:
Anna [14]3 years ago
3 0

Answer:

Increase by $6,000

Explanation:

Calculation to determine the net operating income

Using this formula

Net operating income=Expected sales increase ×Contribution margin ratio-Fixed expenses

Let plug in the formula

Net operating income=$70,000 x 30% - $15,000

Net operating income=$21,000-$15,000

Net operating income=$6,000 increase

Therefore the net operating income will increase by $6,000

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