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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 :

Parrainidn

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.

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