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Calculation of Operating Income and Net Incomes

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Given the following information:

Total assets: $250,000
Debt (12% interest rate): $150,000
Equity: $40,000
Variable cost of production: $150 per unit
Fixed cost of production: $50,000
Units sold: 1000
Sales price: $210 per unit

What happens to operating income and net income when revenue is increased by 10 percent?

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Solution Preview

Given the following information:

Total assets: $250,000
Debt (12% interest rate): $150,000
Equity: $40,000
Variable cost of production: $150 per unit
Fixed cost of production: $50,000
Units sold: 1000
Sales price: $210 per unit

What happens to operating income and net income is increased by 10 percent?
Verify your answer.

Calculation for operating ...

Solution Summary

This solution clearly illustrates in a step-by-step process on how to calculate operating income and net income from predetermined financial values.

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