Billings Company has developed the following budgeted income statement:
Sales Revenue (2,300 units × $14 sales price)                $32,200
Total Variable Expenses (2,300 × $6 per unit)                 (13,800)
Contribution Margin                                                             18,400
Fixed Expenses                                                                     (10,000)
Net Income                                                                             $8,400

The Company is experimenting with new engineering techniques and believes it can reduce variable cost to $4.50 per unit and significantly improve the product. The innovations would double fixed costs but the company expects to be able to increase sales to 3,500 units. If this strategy is pursued the company's budgeted net income will:
A) decrease by $4,250.
B) increase by $4,850.
C) increase by $13,250.
D) decrease by $4,150.

Answer rating: 100% (QA)

New sales revenue 350014 New sales revenue 49000 Fixed cost 100... View the full answer