Last month when Harrison Creations, Inc., sold 40,000 units, total sales were $300,000, total

Exercise 5-4 Computing and Using the CM Ratio [LO3]

Last month when Harrison Creations, Inc., sold 40,000 units, total sales were $300,000, total variable expenses were $240,000, and fixed expenses were $45,000.

Required:
1.	What is the company’s contribution margin (CM) ratio? (Omit the "%" sign in your response.)

Contribution margin ratio

20  %

2.	Estimate the change in the company’s net operating income if it were to increase its total sales by $1,500. (Omit the "$" sign in your response.)

Estimated change in net operating income

$ 300