CORRECT ANSWER B. IF RAYMUND INSTALLS THE AUTOMATED PROCESS, TH...

261.

Correct answer b. If Raymund installs the automated process, the monthly operating income

would be $10,000 as shown below.

Reduction in variable costs: ($50,000 ÷ 5,000) = $10 - $5 = $5

Sales

$100,000

Variable manufacturing

25,000

($5 x 5,000)

Variable selling

15,000

Contribution

60,000

Fixed manufacturing

46,000

Fixed selling

4,000

Operating income

$ 10,000