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Goldin corporation currently pays its salesperson a flat salary of $5,000 per month and is considering paying $20 per unit instead. Sales are currently 200 units per month. Goldin believes the compensation change will increase unit sales by 25%. The current contribution margin is $80 per unit. If the change is implemented, net operating income will ______

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ayokenny2001

The net operating income will be $4,000 increase if the change is implemented.

What is contribution margin?

Contribution margin refers to a business sales revenue minus its variable costs. The resulting contribution margin can be used to cover its fixed.

The current income

= (Contribution margin x sales) - Flat salary

= (80 x 200) - 5,000

= $11,000

The new income

= (80 Contribution margin - 20 per unit) x 200 units x 1.25 increase

= 60 x 200 x 1.25

= $15,000

The difference between the new income and current income would be:

= 15,000 - 11,000

= $4,000 increase

Hence, the net operating income will be $4,000 increase if the change is implemented.

Learn more about contribution margin here : https://brainly.com/question/26850098

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