Contribution margin ratio: 65%

Variable cost ratio: 35%

Breakeven sales: $410,000

Margin of safety: $240,000

Carla Vistas sales were to increase by $200,000 with no change in fixed expenses, by how much would operating income increase? The net operating income would increase by $130,000

Question to Answer:

Carla Vistas managers have determined that variable costs per unit will increase by 18% beginning next month. To offset this increase in costs, they are considering a 12% increase in the sales price. Market research indicates that the price increase will result in a 2% decrease in the number of learning systems Carla Vista sells. What will be Carla Vistas expected operating income if the price increase is implemented? (Round per unit calculations to 2 decimal places e.g. 52.75 and final answer to 0 decimal places, e.g. 5,275.)

Carla Vista sells a learning system that helps preschool and elementary students learn basic math facts and concepts. The company's income statement from last month is as follows: Total Per Unit Sales revenue $650,000 $50 Variable expenses 227,500 17.50 Contribution margin 422,500 $32.50 Fixed expenses 266,500 Operating income $ 156,000