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Georgia [21]
4 years ago
6

A company’s manager estimates that in the upcoming year, increasing advertising costs by $25,000 will cause sales revenue to inc

rease by $60,000. If the company’s contribution margin ratio is 35%, what will be overall effect on net income? Group of answer choices
Business
1 answer:
Vinvika [58]4 years ago
4 0

Answer:

Loss of $4,000 in overall net income

Explanation:

Contribution margin is the net of the sale price and variable cost. Contribution margin ratio is the ratio of contribution to sales.

According to given data

Sales = $60,000

Contribution Margin = $60,000 x 35% = $21,000

Net Income = Contribution margin - Fixed costs = $21,000 - $25,000 = -$4,000

Advertisement Expense is a fixed cost.

There will be a loss of $4,000 added to overall net income.

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3 years ago
Researching the demographics of a fan base for a particular sport would be most closely associated with which core standard of m
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