Hancock Company manufactures and sells two lines of furniture, case goods and upholstery. During the most recent accounting period, the Case Goods and Upholstery Divisions sold 15,000 and 2,000 units, respectively. The company's most recent financial statements are shown below: (Do not round intermediate calculations.) Case Goods UpholsterySales$1,600,000 $400,000 Less cost of goods sold: Unit-level production cost 1,000,000 240,000 Depreciation, production equipment 240,000 60,000 Gross margin$360,000 $100,000 Less operating expenses: Unit-level selling and administrative costs 60,000 50,000 Corporate-level facility expenses (fixed) 52,000 52,000 Net income (loss)$248,000 $(2,000)If unit sales for both divisions
increased 10%, the company would report which of the following?
A. A $52,000 increase in net income for the Upholstery Division
B. A net income for the Upholstery Division of $9,000
C. A 10% increase in total net income of the company
D. A decline in profit for the Upholstery Division.
Answer: B
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