FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Below is information from Omicron Company's most recent income statement.
Sales
$500,000
300,000
Variable Expenses
Contribution Margin $200,000
Annual fixed expenses are $70,000 and Omicron sold 20,000 units. If, in the current
period, fixed expenses are expected to decrease by $10,000 and unit sales decrease by
10%, the change in net operating income will be:
a.
b.
C.
d.
$10,000 decrease
$20,000 decrease
$30,000 decrease
$10,000 increase
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Transcribed Image Text:Below is information from Omicron Company's most recent income statement. Sales $500,000 300,000 Variable Expenses Contribution Margin $200,000 Annual fixed expenses are $70,000 and Omicron sold 20,000 units. If, in the current period, fixed expenses are expected to decrease by $10,000 and unit sales decrease by 10%, the change in net operating income will be: a. b. C. d. $10,000 decrease $20,000 decrease $30,000 decrease $10,000 increase
Expert Solution
Check Mark
Step 1: Background

Net operating income means the sale price less variable cost which is contribution and then we reduces the fixed cost to arrive at net operating income.

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