Zona Company’s income statement for 2010 for Brands A and Z and for the company as a whole follows:
|
Total |
Brand A |
Brand Z |
|
|
Sales |
$450,000 |
$250,000 |
$200,000 |
|
Variable expenses |
(322,000) |
(160,000) |
(162,000) |
|
Contribution margin |
$128,000 |
90,000 |
38,000 |
|
Direct fixed expenses |
(53,000) |
(22,000) |
(31,000) |
|
Segment margin |
$ 75,000 |
$ 68,000 |
$ 7,000 |
|
Common fixed expenses |
(45,000) |
||
|
Operating Income |
$ 30,000 |
If Brand Z’s sales increase by $25,000 and its direct fixed expenses increase by $3,000, operating income for the company as a whole would increase by a. $875.
b. $1,167.
c. $1,750.
d. $4,167.
e. $1,900.