Scott Power produces batteries. Scott has determined its contribution margin to
ID: 2551508 • Letter: S
Question
Scott Power produces batteries. Scott has determined its contribution margin to be $9.50 per battery and its contribution margin ratio to be 0.48. What is the effect on profits of the sale of one additional battery? Of one additional dollar of sales? (Round your answers to 2 decimal places.)
PLEASE Explain answers particularly how you determined the value of "For every additional dollar"
Operating Profits will
(Increase / Decrease)
By
For each additional battery sold
Operating Profits will
(Go up / Go Down)
By
For every additional dollar of sales
Scott Power produces batteries. Scott has determined its contribution margin to be $9.50 per battery and its contribution margin ratio to be 0.48. What is the effect on profits of the sale of one additional battery? Of one additional dollar of sales? (Round your answers to 2 decimal places.)
PLEASE Explain answers particularly how you determined the value of "For every additional dollar"
Operating Profits will
(Increase / Decrease)
By
For each additional battery sold
Operating Profits will
(Go up / Go Down)
By
For every additional dollar of sales
Explanation / Answer
Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars Amount Contribution margin 9.50 Contribution margin ratio 0.48 Sales price = 9.50/.48 19.79 Operating profits will increase by $9.50 for each additional battery sold Operating profits will go up by $.48 for every additional dollar of sales as explained below Additional sales 1.00 Contribution margin ratio 0.48 Contribution = 1 * .48 0.48 Fixed costs does not increase will output thus would be 0 - Profit = .48 - 0 0.48
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