1. The sales manager believes at 10% increase in variable unit selling expense well increase sales volume. if the sales volume increases by 28.5% what will be the change in net operating income? Is this a good idea, why or why not?

2. The marketing manager believes that an increase in advertising and a better quality materials will increase sales volume by 40%. If this change increases the per unit vairable production cost by 15%, and it fixed selling expenses increase by 12%, what will be the new break-even point in dollar sales? Change in Net Income? is this a good idea, why or why not?

3. calculate the degree of operating leverage (round two decimal places). what would net income be if sales increased by 20%? Verify your calculation is in the contribution format income statement.

Technology Business Solutions Income Statement $331,000 43,500 173,250 216,750 Sales Cost of goods sold Finished goods inventory, beginning Add: Cost of goods manufactured Cost of goods available for sale Deduct: Finished goods inventory, ending Unadjusted cost of goods sold Add: Underapplied overhead Adjusted cost of goods sold Gross margin Selling and administrative expenses: Administrative salaries expense Selling expense Utility Expense Depreciation expense Net operating income 47,450 169,300 13,800 183,100 147,900 21,000 45,000 5,000 8,000 79,000 68,900 Technology Business Solutions Income Statement $331,000 43,500 173,250 216,750 Sales Cost of goods sold Finished goods inventory, beginning Add: Cost of goods manufactured Cost of goods available for sale Deduct: Finished goods inventory, ending Unadjusted cost of goods sold Add: Underapplied overhead Adjusted cost of goods sold Gross margin Selling and administrative expenses: Administrative salaries expense Selling expense Utility Expense Depreciation expense Net operating income 47,450 169,300 13,800 183,100 147,900 21,000 45,000 5,000 8,000 79,000 68,900