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?