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    net operating income

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    Information concerning Label Corporation's operations follow:
    Variable expenses...$240,000
    Fixed expenses...$40,000

    Assuming that Label increased sales by 20%, what should net operating income be?

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    Solution Preview

    If sales increase, then expenses probably increased too.

    - Fixed expenses are fixed, so they are not changed when sales increase. So Fixed Expenses after the sales increase remain at $40,000

    - Variable ...

    Solution Summary

    Net operating income is solved.