8. Cindy. Inc. sells a product for $10 per unit. The variable expenses are $6 per unit, and the fixed expenses total $35,000 per period. By how much will net operating income change if sales are expected to increase by $40,000? A $16,000 increase B. $5,000 increase C. $24,000 increase D. $11,000 decrease 9. Pool Company\'s variable expenses are 36% of sales. Pool is contemplating an advertising campaign that will cost $20,000. If sales increase by $80,000, the company\'s net operating income should increase by: A $28,800 B. $64,000 C. $8,800 D. $31,200 Solution Question No 8 . Calculation of Net Operation Income ,for increase in sale by $ 40,000 1. Selling Price of the Product - $ 10 Total sales value - $ 40,000 No, of units sold = $ 40,000 / $ 10 = 4000 Units 2. Variable expense per unit = $ 6 Total Variable cost for 4000 units = 4000 X $ 6 = $ 24,000 3. Net Operating Income = Sales - Variable Cost = $ 40,000 - $ 24,000 = $ 16,000 Answer Hence Net Operation Income for increase in sales by $ 40,000 is - ( A ). $16,000 ( Answer ) Question 9. Calculation of Net Operation Income ,for increase in sale by $ 80,000 1. Variable expense 36 % of sales Sales value = $ 80,000 Total Variable expense = $ 80,000 X 36 % = $ 28,800 2. Net Operation Income = Sales - Varaible expense - Advertising cost = $ 80, 000 - $ 28,800 - $ 20,000 = $ 31,200 Answer Hence Net Operating Income for increase in sales by $ 80,000 is - ( D ). $ 31,200 Answer Note : Advertising cost of $ 20,000 are reduced because they are directly related to sales and hence are subtracted / reduced. .