The Incredible Donut owns and operates six doughnut outlets in and around Kansas City.
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Business, 17.04.2020 17:07 allyssaharrisooy50au
The Incredible Donut owns and operates six doughnut outlets in and around Kansas City.
You are given the following corporate budget data for next year:
Revenue Variable Cost Contribution Margin Fixed Cost Budgeted Operating Income
10,400,000 7,900,000 2,500,000 2,100,000
Variable costs change based on the number of doughnuts sold.
Required:
Compute the budgeted operating income for each of the following deviations from the original budget data.
(Consider each case independently)
1. An 11% increase in contribution margin, holding revenues constant.
2. An 11% decrease in contribution margin, holding revenues constant.
3. A 4% increase in fixed costs.
4. A 4% decrease in fixed costs.
5. A 7% increase in units sold.
6. A 7% decrease in units sold.
7. An 11% increase in fixed costs and a 11% increase in units sold.
8. A 4% increase in fixed costs and a 4% decrease in variable costs.
9. Which of these alternatives yields the highest budgeted operating income?
Answers: 2
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