Question

Carlos Naturals manufactures bulk quantities of cleaning fluids. The company currently sells 700 containers a month at a sales price of $ 28 per unit. The addition of a new disinfectant will result in a sales price of $ 30 per unit for the improved product. It would cost a total of $ 4 comma 400 per month to make the alteration. Operating income would

Answer 1

Answer:

Operating income would be $ 16,600

Explanation:

Consider the new circumstance addition of a new disinfectant.

Incremental Costs and Revenues - addition of a new disinfectant

Sales (700× $ 30)           21,000

Alteration Cost 4,400    (4,400)

Net Income                     16,600

Therefore Operating income would be  16,600

Answer 2

Based on the information given Operating income would decrease by $3,000

Operating income:

Sales $21,000

(700× $ 30)

Sales Addition  ($19,600)      

(700× $28)

Alteration Cost   ($4,400)

Operating  Income    -$3,000

Inconclusion the  Operating income would decrease by $3,000.

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