EXERCISE 6-1 (20 MINUTES)

1. The new income statement would be:

Total Per Unit

Sales (10,100 units) ... $353,500 $35.00

Less variable expenses ... 202,000 20.00

Contribution margin ... 151,500 $15.00

Less fixed expenses... 135,000

Net operating income ... $ 16,500

You can get the same net operating income using the following ap-

proach.

Original net operating income ... $15,000

Change in contribution margin

(100 units × $15.00 per unit) ... 1,500

New net operating income ... $16,500