QUESTION 38

1. Middle Inc' income statement is as follows:

   Sales (10,000 units)	$120,000
   Less variable costs	(48,000)
   Contribution margin	$72,000
   Less fixed costs	(36,000)
   Net income	36,000
   If sales volume increases by 10%, profits will:

   		Increase by $12,000
   		Increase by $4,800
   		Increase by $7,200
   		Increase by $3,600