The Following Is Allison Corporation's Contribution Format Income Statement for Last

question 112

Multiple Choice

The following is Allison Corporation's contribution format income statement for last month:
$\begin{array}{|l|r|}\hline \text { Sales } & \$ 800,000 \\\hline \text { Less: variable expenses } & \underline{300,000} \\\hline \text { Contribution margin } & 500,000 \\\hline \text { Less: fixed expenses } & \underline{400,000} \\\hline \text { Operating income } & \$ 100,000 \\\hline\end{array}$ The company has no beginning or ending inventories. The company produced and sold 10,000 units last month.


-If sales increase by 200 units,by how much should before-tax profits increase?

• A) $16,000.
• B) $5,000.
• C) $2,000.
• D) $10,000.

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Definitions:

Rebate Check

A refund or discount on products or services, often sent to consumers in the form of a check after a purchase.

Bearer

A term referring to an individual or entity that possesses a negotiable instrument, like a check or bond, and has the right to receive the funds or assets it represents.

Payee

The person or entity to whom a payment is to be made or credited.

Parts Warehouse

A storage facility specialized in storing spare parts for various types of machinery or vehicles.