Below is information from Omicron Company's most recent income statement. Sales $500,000 300,000 Variable Expenses Contribution Margin $200,000 Annual fixed expenses are $70,000 and Omicron sold 20,000 units. If, in the current period, fixed expenses are expected to decrease by $10,000 and unit sales decrease by 10%, the change in net operating income will be: a. b. C. d. D $10,000 decrease $20,000 decrease $30,000 decrease $10,000 increase
Below is information from Omicron Company's most recent income statement. Sales $500,000 300,000 Variable Expenses Contribution Margin $200,000 Annual fixed expenses are $70,000 and Omicron sold 20,000 units. If, in the current period, fixed expenses are expected to decrease by $10,000 and unit sales decrease by 10%, the change in net operating income will be: a. b. C. d. D $10,000 decrease $20,000 decrease $30,000 decrease $10,000 increase
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![Below is information from Omicron Company's most recent income statement.
Sales
$500,000
300,000
Variable Expenses
Contribution Margin $200,000
Annual fixed expenses are $70,000 and Omicron sold 20,000 units. If, in the current
period, fixed expenses are expected to decrease by $10,000 and unit sales decrease by
10%, the change in net operating income will be:
a.
b.
C.
d.
$10,000 decrease
$20,000 decrease
$30,000 decrease
$10,000 increase](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fad61fb23-6772-4c68-a944-71325d2213c5%2F0a3f4155-8b56-4cc4-8dae-35b98dac8d19%2Fma20krj_processed.png&w=3840&q=75)
Transcribed Image Text:Below is information from Omicron Company's most recent income statement.
Sales
$500,000
300,000
Variable Expenses
Contribution Margin $200,000
Annual fixed expenses are $70,000 and Omicron sold 20,000 units. If, in the current
period, fixed expenses are expected to decrease by $10,000 and unit sales decrease by
10%, the change in net operating income will be:
a.
b.
C.
d.
$10,000 decrease
$20,000 decrease
$30,000 decrease
$10,000 increase
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
Step 1: Background
Net operating income means the sale price less variable cost which is contribution and then we reduces the fixed cost to arrive at net operating income.
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