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Contribution margin ratio

Co has a contribution margin ratio of 25%. The Co. is considering a proposal that will increase sales by $100,000. What increase in profit can be expected assuming total costs increase by $20,000?

Solution Preview

Increase in sales =$100,000

Variable cost ratio = 100% - contribution margin ratio of 25%.=100%- ...

Solution Summary

Solution explains how to calculated profit at given sales level using contribution margin ratio.