Tuesday 31 July 2012

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 correct %  

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 correct  

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