Spartan Systems reported total sales of 310000 at a price of

Spartan Systems reported total sales of $310,000, at a price of $25 and per unit variable expenses of $16, for the sales of their single product. Total Per Unit Sales $310,000 $25 Variable expenses 198,400 16 Contribution margin 111,600 $9 Fixed expenses 101,000 Net operating income $10,600 What is the amount of contribution margin if sales volume increases by 20%? (Round your intermediate calculations to 2 decimal places and your final answer to the nearest whole number.)

$122,000

$25,200

$133,920

$16,800

Solution

Number of units = 310000/25 = 12400

new sales volume = 310000 * (1+20%) = 372000

new sales units = 372000/25 = 14880

new variable expenses = 14880 * 16 = 238080

new contribution margin = 372000 - 238080 = 133920