QUESTION 6

1. Information concerning Label Corporation's operations follows:
4. Total
5. Per-unit
6. Sales (1,000 units)
8. $300,000
9. $300
10. Variable expenses
12. 240,000
13. 240
14. Contribution margin
16. 60,000
17. 60
18. Fixed expenses
20. 20,000
22. Degree of operating leverage
23. 1.5
26. Contribution margin ratio
27. 0.2 (20%)
31. Assuming that Label increased sales by $90,000 (by 30%) and fixed expenses remain the same,bywhat amount or percent will net operating income increase?
32. $27,000
33. 30%
34. $18,000
35. 9%
36. $90,000