Answer:
$200000 increase.
Explanation:
Given: Selling price= $60.
Variable cost per unit= $35.
Fixed cost= $125000.
Current sales= 10000.
Increase in sales by 8000.
Now, computing current operating income.
Operating income= [tex]Selling\ price - (Variable\ cost+fixed\ cost)[/tex]
⇒ Operating income= [tex]\$ 60\times 10000- (\$125000+\$ 35\times 10000)[/tex]
⇒ Operating income= [tex]\$ 600000- (\$ 125000+\$350000)[/tex]
Opening parenthesis
⇒ Operating income= [tex]\$ 600000- \$ 475000[/tex]
∴ Operating income= [tex]\$ 125000[/tex]
Next, computing operating income if sales increase by 8000 units.
∴ New sales= [tex]10000+8000= 18000\ units[/tex]
⇒ Operating income= [tex]\$ 60\times 18000- (\$ 125000+\$ 35\times 18000)[/tex]
⇒ Operating income= [tex]\$ 1080000- (\$ 125000+ \$ 630000)[/tex]
Opening parenthesis
⇒ Operating income= [tex]\$ 1080000- \$ 755000[/tex]
∴ Operating income= [tex]\$ 325000[/tex]
Change in operating income after increase in sales= [tex]\$325000-\$ 125000= \$ 200000[/tex]
Hence, there is an increase of $200000 in operating income as sales increase by 8000.
