Question 2 A partial income statement of Nile Corporation for Year O follows. The company uses just-in- time inventory, so production each year equals sales. Each dollar of finished product produced in Year O contained $0.50 of direct materials, $0.33333 of direct labor, and $0.16667 of overhead costs. During Year O, fixed overhead costs were $40,000. No changes in production methods or credit policies are anticipated for Year 1. NILE CORPORATION Partial Income Statement for Year 0 Sales (100,000 units at $10) Cost of Goods Sold Goss Margin Selling Costs Administrative Costs Operating Profits $1,000,000 600,000 400,000 $150,000 100,000 250,000 150,000 Management has estimated the following changes for Year 1: 30 percent increase in number of units sold 20 percent increase in unit cost of materials 12 percent increase in direct labor cost per unit 10 percent increase in variable overhead cost per unit 5 percent increase in fixed overhead costs 4 3713 words