A company has provided the following data: Sales 4,000 units Sales price $80 per unit Variable cost $50 per unit Fixed cost $ 30,000 If the dollar contribution margin per unit is increased by 10 percent, total fixed cost is decreased by 15 percent, and all other factors remain the same, will net operating income increase or decrease? By how much?

Managerial Accounting: The Cornerstone of Business Decision-Making
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Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
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Chapter3: Cost Behavior And Cost Forecasting
Section: Chapter Questions
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A company has provided the following data:
Sales
4,000 units
Sales price
$80 per unit
Variable cost
$50 per unit
Fixed cost
$ 30,000
If the dollar contribution margin per unit is increased by 10 percent, total
fixed cost is decreased by 15 percent, and all other factors remain the
same, will net operating income increase or decrease? By how much?
Transcribed Image Text:A company has provided the following data: Sales 4,000 units Sales price $80 per unit Variable cost $50 per unit Fixed cost $ 30,000 If the dollar contribution margin per unit is increased by 10 percent, total fixed cost is decreased by 15 percent, and all other factors remain the same, will net operating income increase or decrease? By how much?
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