EXERCISE 6-1 (20 MINUTES)

2. The new income statement would be:

Total Per Unit

Sales (9,900 units) ... $346,500 $35.00

Less variable expenses ... 198,000 20.00

Contribution margin ... 148,500 $15.00

Less fixed expenses... 135,000

Net operating income ... $ 13,500

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 ... $13,500