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2-A3 Exercises in Cost-Volume-Profit Relationships Upcraft Moving Company specializes in hauling heavy goods over long distances. The company's revenues and expenses depend on revenue-miles, a measure that combines both weights and mileage. CHAPTER 2. INTRODUCTION TO COST BEHAVIOR AND COST-VOLUME-PROFIT RELATIONSHIPS 65 Summarized budget data for next year are based on predicted total revenue miles of 500.000. At that level of volume, and at any level of volume between 300,000 and 700,000 revenue miles, the company's fixed costs are $50,000. The selling price and variable costs are as follows: Per Revenue-Mile Average selling price (revenue) Average variable expenses $2.00 1.60 1. Compute the budgeted net income. Ignore income taxes. 2. Management is trying to decide how various possible conditions or decisions might affect net income. Compute the new net income for each of the following changes. Consider each case independently a. A 30% increase in sales price, b. A 30% increase in revenue miles. c. A 30% increase in variable expenses. CHAPTER 2