A firm has revenues of $120,000, a contribution margin ratio of 30%, and fixed expenses that total $56,000

Accounting Aug 27, 2020

A firm has revenues of $120,000, a contribution margin ratio of 30%, and fixed expenses that total $56,000. If revenues increase $20,000, then:

operating income will increase by $6000.
operating income will be 0.
fixed expenses will increase $8000.
the contribution margin ratio will increase by 1/8.

Expert Solution

A firm has revenues of $120,000, a contribution margin ratio of 30%, and fixed expenses that total $56,000. If revenues increase $20,000, then:

operating income will increase by $6000.
operating income will be 0.
fixed expenses will increase $8000.
the contribution margin ratio will increase by 1/8.

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