Billings Company Has Developed the Following Budgeted Income Statement: the Company

question 52

Multiple Choice

Billings Company has developed the following budgeted income statement: The Company is experimenting with new engineering techniques and believes it can reduce variable cost to $4.50 per unit and significantly improve the product. The innovations would double fixed costs but the company expects to be able to increase sales to 3,500 units. If this strategy is pursued the company's budgeted net income will:
$$\begin{array} { | l | r | } \hline \text { Sales Revenue } ( 2,300 \text { units } x ~ \$ 14 \text { sales price } ) & \$ 32,200 \\\hline \text { Total Variable Expenses } ( 2,300 \times \$ 6 \text { per unit) } & ( 13,800 ) \\\hline \text { Contribution Margin } & 18,400 \\\hline \text { Fixed Expenses } & ( 10,000 ) \\\hline \text { Net Income } & \$ 8,400 \\\hline & \\\hline\end{array}$$

• A)decrease by $4,250.
• B)increase by $4,850.
• C)increase by $13,250.
• D)decrease by $4,150.

---

Definitions:

Clustering

Clustering refers to a methodology used in machine learning and statistics to group similar objects into sets or categories where the objects share certain characteristics.

Regions

Geographically or politically defined areas that share common characteristics, often used in studies related to economics, culture, and politics.

Similar Industries

Industries that produce related products or services and compete within the same market or sector.

Human Capital

The economic value of the skills, knowledge, and experience possessed by an individual or population.