Week 3 Problems Acc 561

# Week 3 Problems Acc 561 - Week 3 Problems Acc 561...

This preview shows pages 1–2. Sign up to view the full content.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Week 3 Problems Acc 561 2-48 (10-15 min.) Amounts are in millions (rounded with slight rounding errors). Net sales (1.10 x \$68,222) \$75,044 Variable costs: Cost of goods sold (1.10 x \$33,125) 36,438 Contribution margin 38,606 Fixed costs: Selling, administrative, and general expenses 21,848 Operating income \$16,758 The percentage increase in operating income would be (\$16,758 ÷ \$13,249) - 1 = .26 or 26%, compared with a 10% increase in sales. The contribution margin would increase by 10% or .10 x (\$68,222 - \$33,125) = \$3,510 million. Because fixed costs would not change (assuming the new volume is within the relevant range), operating income would also increase by \$3,510 million, from \$13,249 million to \$16,759 million. If all costs had been variable, costs would have increased by an additional .10 x \$21,848 = \$2,185 million, making operating income \$16,758 - \$2,185 = would have increased by an additional ....
View Full Document

{[ snackBarMessage ]}

### Page1 / 2

Week 3 Problems Acc 561 - Week 3 Problems Acc 561...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online