Question: Given the following information:
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Total assets
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$100,000
|
|
Debt (12% interest rate)
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$80,000
|
|
Equity
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$20,000
|
|
Variable costs of production
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$14 per unit
|
|
Fixed cost of production
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$27,000
|
|
Units Sold
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12,300
|
|
Sales price
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$19.75 per unit
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What happens to operating income and net income if output is increased by 10 percent? Verify your answer.