Last month when Harrison Creations, Inc., sold 35,000 units, total sales were $2
ID: 2374569 • Letter: L
Question
Last month when Harrison Creations, Inc., sold 35,000 units, total sales were $281,000, total variable expenses were $227,610, and fixed expenses were $35,900.
What is the company%u2019s contribution margin (CM) ratio? (Omit the "%" sign in your response.)
Estimate the change in the company%u2019s net operating income if it were to increase its total sales by $1,400. (Omit the "$" sign in your response.)
What is the company%u2019s contribution margin (CM) ratio? (Omit the "%" sign in your response.)
Explanation / Answer
1.What is the company contribution margin (CM) ratio? (Omit the "%" sign in your response.)
Contribution margin ratio = Total COnt/Total Sales
= (281000-227610)/281000 = 19.00%
2.Estimate the change in the company net operating income if it were to increase its total sales by $1,400. (Omit the "$" sign in your response.)
Increase in Net Income = CM Ratio *Increase in Sales
= 19%*1400 = $266.00
Estimated change in net operating income $266.00
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