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If a company raises its required net income a
If a company raises its required net income
a.the tax rate will decrease
b.break even point is negative
c.required contribution margin increases
d.required contribution margin decreases
Expert Solution
If a company raises its required net income required contribution margin increases. As we know that
Required Net Income = Contribution Margin - Fixed Cost
Hene when required net income increase with fixed costs remaining the same, required contribution margin increases.
The correct option is C "required contribution margin increases".
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