The July contribution format income statement of Doxtater Corporation appears below: I

Sales $ 564,400

Variable expenses 312,800

Contribution margin 251,600

Fixed expenses 193,800

Net operating income $ 57,800

If the company's sales increase by 19%, its net operating income should increase by а bout: (Round your intermediate calculations to 2 decimal places.)

a. 10%

b. 83%

c. 186%

d. 19%

The correct answer is B.

Explanation:

Giving the following information:

Sales $ 564,400

Variable expenses 312,800

Contribution margin 251,600

Fixed expenses 193,800

Net operating income $ 57,800

First, we need to calculate the new net operating income. Then, compare it to the old one and calculate the percentual change.

Sales = 564,400*1.19 = 671,636

Variable expenses = (312,800*1.19) = (372,232)

Contribution margin = 299,404

Fixed expenses = (193,800)

Net operating income = 105,604

%change = (income 1 - income 0) / income 0

%change = (105,604 - 57,800) / 57,800 = 0.827 = 83%