Barkins Moving Company specializes in hauling heavy goods over long distances. The company’s revenues and expenses depend on revenue kilometres, a measure that combines both weights and distance travelled. Summarized budget data for next year are based on predicted total revenue kilometres of 800,000. At that level of volume, and at any level of volume between 700,000 and 900,000 revenue kilometres, the company’s fixed costs are $120,000. The selling price and variable costs are 

Per Revenue Kilometre
Average selling price (revenue) .........................    $1.50
Average variable expenses ................................      1.30

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 10 percent increase in sales price.
b. A 10 percent increase in revenue kilometres.
c. A 10 percent increase in variable expenses.
d. A 10 percent increase in fixed expenses.
e. An average decrease in selling price of $0.03 per revenue kilometre and a 5 percent increase in revenue kilometres. Refer to the original data.
f. An average increase in selling price of $0.05 and a 10 percent decrease in revenue kilometres.
g. A 10 percent increase in fixed expenses in the form of more advertising and a 5 percent increase in revenue kilometres.