Increase in the price of the companys operating income

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Reference no: EM13788107

SAB Company has the following income statement:

Revenues $100,000

Variable Costs 40,000

Contribution Margin 60,000

Fixed Costs 30,000

Operating Income 30,000

1. If SAB's sales increase by $20,000 solely due to an increase in the units sold, what will be the company's operating income?

2. If SAB's sales increase by $20,000 and the increase is due solely to an increase in the price of the company's operating income?

3. Assume that SAB's sales consist of a large number of products, each with varying contributions margins. Also, assume that the sales mix from year to year remains relatively constant. Using the gross contribution margin percentage approach, what is the level of revenue necessary for SAB to break even?

Reference no: EM13788107

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