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McKnight Enterprises has the following operating profit: Sales $400,000 Variable Costs 160,000 Contribution Margin $240,000 Fixed Costs 140,000 Operating Profit $100,000 The company could increase

McKnight Enterprises has the following operating profit:

Sales $400,000

Variable Costs 160,000

Contribution Margin $240,000

Fixed Costs 140,000

Operating Profit $100,000

The company could increase revenues by 10% by reducing sales discounts by 10%. There will be no changes in variable or fixed costs. What would be the percentage increase in operating profits?

Initial

With 10% Revenue Increase

Net sales revenues

$400,000

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Variable Costs

$160,000

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Contribution Margin

$240,000

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Fixed Costs

$140,000

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Operating Profit

$100,000

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% Change in Operating Profit

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