Answered

Discover a world of knowledge at Westonci.ca, where experts and enthusiasts come together to answer your questions. Ask your questions and receive precise answers from experienced professionals across different disciplines. Explore comprehensive solutions to your questions from a wide range of professionals on our user-friendly platform.

Goldin Corporation currently pays its salesperson a flat salary of $5,000 per month and is considering paying $20 per unit instead. Sales are currently 200 units per month. Goldin believes the compensation change will increase unit sales by 25%. The current contribution margin is $80 per unit. If the change is implemented, net operating income will ______.
a. decrease by $4,000
b. increase by $4,000
c. increase by $1,000
d. decrease by $1,000

Sagot :

Parrain

Based on the new cost of sales and the number of sales for the Goldin Corporation, the net operating income would b. increase by $4,000.

What is the current income?

= (Contribution margin x sales) - Flat salary

= (80 x 200) - 5,000

= $11,000

What is the new income?

= (80 Contribution margin - 20 per unit) x 200 units x 1.25 increase

= 60 x 200 x 1.25

= $15,000

The difference would be:
= 15,000 - 100,000

= $4,000 increase

Find out more on contribution margin at https://brainly.com/question/24881206.

We hope our answers were helpful. Return anytime for more information and answers to any other questions you may have. Thanks for stopping by. We strive to provide the best answers for all your questions. See you again soon. Westonci.ca is your go-to source for reliable answers. Return soon for more expert insights.