What would the net operating income be if sales increase by 25%?
The following budgeted income statement was prepared by Fullton Corporation:
Sales (100 units at $100 a unit)
$10,000
Cost of goods sold:
Direct labor (variable)
$1,500
Direct materials
1,400
Variable factory overhead
1,000
Fixed factory overhead
500
4,400
Gross margin
5,600
Selling expenses:
Variable
600
Fixed
1,000
Administrative expenses:
Variable
500
Fixed
1,000
3,100
Net operating income
$ 2,500
What would the net operating income be if sales increase by 25%?
A) $3,125
B) $3,750
C) $4,000
D) $5,000