Reference no: EM132787982
Question - Southern studio manufactures pianos. In preparing for next year's operations, management has developed the following estimates:
Total Per Unit
Sales (20,000 units) $1,000,000 $50.00
Direct materials (variable) 200,000 10.00
Direct labor (variable) 50,000 2.50
Factory overhead:
Variable 70,000 3.50
Fixed 80,000 4.00
Selling and administrative:
Variable 100,000 5.0
Fixed 30,000 1.5
Compute the following items:
Unit contribution margin.
Contribution margin ratio.
Break-even in sales dollars.
If the sales volume increases by 20% with no change in total fixed expenses, what will be the change in net operating income?