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1.Exercise 3-24 (Page 96) 3-24 CVP exercises. The Deli-Sub Shop owns and operates six stores in and around Minneapolis. You are given the following corporate
1.Exercise 3-24 (Page 96)
3-24 CVP exercises. The Deli-Sub Shop owns and operates six stores in and around Minneapolis. You are given the following corporate budget data for next year:
Revenues | $11,000,000 |
Fixed Costs | $3,000,000 |
Variable Costs | 7,500,000 |
Variable costs change based on the number of subs sold.
Compute the budgeted operating income for each of the following deviations from the original budget data. (Consider each case independently.)
- A 10% increase in contribution margin, holding revenues constant
- A 10% decrease in contribution margin, holding revenues constant
- A 5% increase in fixed costs
- A 5% decrease in fixed costs
- A 5% increase in units sold
- A 5% decrease in units sold
- A 10% increase in fixed costs and a 10% increase in units sold
- A 5% increase in fixed costs and a 5% decrease in variable costs
- Which of these alternatives yields the highest budgeted operating income? Explain why this is the case.
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