Reference no: EM132587060

Nat Company's most recent income statement is shown below:

                                     TOTAL                      PER UNIT

Sales 30,000units       ?150,000              ?5

Less variable expense  90,000                   3

Contribution Margin       60,000                   2

Less:Fixed Expenses   50,000

Net operating Income      10,000

REQUIRED:

Question 1: PREPARE 2 NEW INCOME STATEMENT UNDER EACH OF THE FOLLOWING CONDITIONS (CONSIDER EACH CASE INDEPENDENTLY)

1. The selling price increase by 50 cents per unit, fixed expense increase by ?10,000 and the sales volume decrease b 5%

2. Variable Expense increase by 20 cents per unit, the selling price increases by 12%and the sales volume decreases by 10%.

Prepare new income statements

Question 2: What are the causes of capacity or volume variance. Explain atleast 2 causes and how it affects the operating performance of the business?