Salter inc.'s unit selling price is $50, the unit variable costs are $35, fixed costs are $125,000, and current sales are 10,000 units. how much will operating income change if sales increase by 5,000 units?

$75,000

Explanation:

Given that,

Unit selling price = $50

Unit variable costs = $35

Fixed costs = $125,000

current sales = 10,000 units

Contribution margin per unit:

= Selling price per unit - unit variable costs

= $50 - $35

= $15

Change in Operating income if sales increase by 5,000 units:

= Increase in sales × Contribution margin per unit

= 5,000 units × $15

= $75,000

in 2001, dell computer became the world’s largest personal computer vendor, continuing to

gain market share and post profits in an industry struggling with slumping sales and billions of

dollars in losses. dell sells 90% of its pcs directly to the final customer, largely bypassing the

reseller channel that accounts for most of the world’s pc sales. this direct customer relationship

is the key to dell’s business model, and provides distinct advantages over the indirect sales

model. dell’s direct relationship with the customer allows it to tailor its offerings to customer

needs, offer add-on products and services, and use the internet to offer a variety of customer

services. in addition, dell’s pcs are built to customers’ specifications upon receipt of an order,

giving dell additional advantages over indirect pc vendors who must try to forecast demand and

ship products based on those forecasts. dell’s direct sales and build-to-order model has achieved

superior performance in the pc industry in terms of inventory turnover, reduced overhead, cash

conversion, and return on investment (kraemer, et al., 2000).

explanation:

answer; competency based pay;