Remmel Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. Sales (6,000 units) $ 300,000Variable expenses 240,000Contribution margin 60,000Fixed expenses 59,000Net operating income $ 1,000If sales increase to 6,020 units, the increase in net operating income would be closest to:Multiple Choicea. $1,000.00b. $800.00c. $200.00d. $3.33

Option (c) is correct.

Explanation:

Given that,

Sales (6,000 units) = $ 300,000

Variable expenses = $240,000

Contribution margin = $60,000

Fixed expenses = $59,000

Net operating income = $1,000

Contribution margin per unit:

= Contribution margin ÷ Number of units sold

= $60,000 ÷ 6,000 units

= $10 per unit

If sales increase to 6,020 units,

Contribution margin:

= Contribution margin per unit × Number of units sold

= $10 × 6,020 units

= $60,200

Net operating income:

= Contribution margin - Fixed cost

= $60,200 - $59,000

= $1,200

Increase in net operating income:

= $1,200 - $1,000

= $200