Cost Accounting (15th Edition)

Published by Prentice Hall
ISBN 10: 0133428702
ISBN 13: 978-0-13342-870-4

Chapter 3 - Cost-Volume-Profit Relationships - Assignment Material - Exercises - Page 94: 3-19(7)

Answer

An 11% increase in fixed cost shall be accounted for as specified in (N-1). On the other hand, 11% increase in units sold would cause contribution margin to increase by 11%. Consequently, the budgeted operating income for this deviation can be calculated as follows;

Work Step by Step

(N-1) 2,100,000 × 1.11 = 2,331,000 (N-2) 10,400,000 × 1.11 = 11,544,000 (N-3) 7,900,000 × 1.11 = 8,769,000
Update this answer!

You can help us out by revising, improving and updating this answer.

Update this answer

After you claim an answer you’ll have 24 hours to send in a draft. An editor will review the submission and either publish your submission or provide feedback.