Answer:
See below
Explanation:
1. Contribution margin ratio
= (Sales - Variable cost) / Sales
Sales = $300,000
Variable cost = $234,000
Contribution margin = ($300,000 - $234,000) / $300,000
= 0.22
= 22%
Hence, contribution margin ratio is 22%
2. Change in the net operating income if it can increase total sales by $2,500
Contribution margin of $2,300 = $2,300 × 22%
= $506
Operating income for $300,000 sales is
= Sales - total variable expenses - fixed expenses
= $300,000 - $234,000 - $38,700
= $27,300
If sales is $302,500 the net operating income would be
= $27,300 + $506
= $27,806
• It therefore means that the net operating income will increase by $506
