A company has provided the following data:
Sales 3000 units
Sales Price $70 per unit
Variable cost $50 per unit
Fixed cost $25000
If the dollar contribution margin per unit is increased by 10%, total fixed cost is decreased by 20%, and all other factors remain the same, net operating income will:
A. increase by $61,000.
B. increase by $20,000.
C. increase by $3,500.
D. increase by $11,000.
The current operating income is
Operating income = total contribution margin - fixed cost = (70-50) X ...
The solution explains the correct option from the given alternatives.