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Revenues and Fixed Expenses

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A firm's products have an average contribution margin ratio of 40%, which will be maintained for the next month even though fixed expenses are expected to rise by $20,000. In order to keep operating income for the month from being affected, revenues will have to increase by:

$ 8,000

$12,000

$20,000

$50,000

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Solution Summary

This solution calculates the increase in revenue required based on the required contribution margin.

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