Pong Incorporated\'s segmented income statement for the most recent month is giv
ID: 2483693 • Letter: P
Question
Pong Incorporated's segmented income statement for the most recent month is given below.
If Store B sales increase by $43,000 with no change in fixed expenses, the overall company net operating income should:
increase by $4,300
increase by $27,090
increase by $31,820
increase by $8,600
Please Explain
Total Store A Store B Sales $157,500 $61,000 $96,500 Variable expenses 53,760 28,670 25,090 Contribution margin 103,740 32,330 71,410 Traceable fixed expenses 69,100 19,900 49,200 Segment margin 34,640 $12,430 $22,210 Common fixed expenses 20,400 Net operating income $ 14,240Explanation / Answer
contribution margin ratio = contribution margin / sales
contribution margin ratio of B = 71410 / 96500 = 0.74
change in net opearing income = contribution margin ratio * changes in sales
change in net opearing income = 0.74*43000 = 31820
answer is increase by $31820