Question

Spice Inc. S unit selling price is $48, unit variable costs are $30, fixed costs are $108,000, and current sales are 9,500 units. How much will operating income change if sales increase by 6,000 units

Answer 1

The operating income will change if sales increase by 6,000 units by: 108,000.

Change in operating income

Using this formula

Change in operating income=(Selling price-Variable cost)×Increase in sales

Let plug in the formula

Change in operating income=($48-$30)×6,000 units

Change in operating income=$18×6,000 units

Change in operating income=108,000 increase

Inconclusion the operating income will change if sales increase by 6,000 units by: 108,000.

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