Question

City Bagel operates four bagel stores in New York. The owner has provided the following budgeted data for next year.

Revenue	$11,419,000
Fixed Costs	$3,308,000
Variable Costs (depends on the # of bagels sold)	$7,820,000

For each of the following scenarios, determine the dollar impact on City Bagel.
Consider each scenario independently.
Do not enter dollar signs or commas in the input boxes.
Round all answers to the nearest whole number. Enter all values as positive values. Do not use the negative sign.

i. A 6% increase in fixed costs.

Revenue:	AnswerDecrease byIncrease byNo change	$Answer
Variable Costs:	AnswerDecrease byIncrease byNo change	$Answer
Fixed Costs:	AnswerDecrease byIncrease byNo change	$Answer
Contribution Margin:	AnswerDecrease byIncrease byNo change	$Answer
Budgeted Operating Income:	AnswerDecrease byIncrease byNo change	$Answer

ii. A 8% increase in contribution margin, but holding revenue constant.

Revenue:	AnswerDecrease byIncrease byNo change	$Answer
Variable Costs:	AnswerDecrease byIncrease byNo change	$Answer
Fixed Costs:	AnswerDecrease byIncrease byNo change	$Answer
Contribution Margin:	AnswerDecrease byIncrease byNo change	$Answer
Budgeted Operating Income:	AnswerDecrease byIncrease byNo change	$Answer

iii. A 16% increase in fixed costs and 14% increase in units sold.

Revenue:	AnswerDecrease byIncrease byNo change	$Answer
Variable Costs:	AnswerDecrease byIncrease byNo change	$Answer
Fixed Costs:	AnswerDecrease byIncrease byNo change	$Answer
Contribution Margin:	AnswerDecrease byIncrease byNo change	$Answer
Budgeted Operating Income:	AnswerDecrease byIncrease byNo change	$Answer

Answer 1

(i) If everything remain constant, then increase in Fixed rate only decrese net operating income.

(ii) If revenue remain constant, and there is no change in fixed cost, it will lead to increase in Net Operating Income.

(iii) Increse in unit sold, it will lead to increase in sales and variable cost consequently increase the contribution margin. in addition increase in fixed cost, then decrease in Net Operating Income.