A company's current sales are $300,000 and fixed expenses total $225,000. The contribution margin ratio is 30%. The company has

Question

3 years ago

11

A company's current sales are $300,000 and fixed expenses total $225,000. The contribution margin ratio is 30%. The company has

decided to expand production which is expected to increase sales by $70,000 and fixed expenses by $15,000. If these results occur, net operating income will:___________

Business

1 answer:

jeka57 [31] · Answer 1 · 2022-02-19T08:48:42+03:00

jeka57 [31]3 years ago

7 0

Answer:

$6,000

Explanation:

The net operating income will increase by $6,000;

$70,000*30%-$15,000=$6,000

As the CM ratio is 30% and $15,000 are fixed expenses,net result will be increase in net operating income.