You have been provided with the following information: Total Sales $ 90,000 Less variable expenses 54,000...

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Question

You have been provided with the following information: Total Sales $ 90,000 Less variable expenses 54,000...

You have been provided with the following information:

	Total
Sales	$	90,000
Less variable expenses		54,000
Contribution margin		36,000
Less fixed expenses		24,000
Operating profit	$	12,000

If sales increase by 10%, what level of fixed costs will yield a 20% increase in profits?

business accounting

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Answer 1

Answer #1

If sales increase by 10%, the level of fixed costs will yield a 20% increase in profits

= (Contribution margin x 110%) - (Operating profit x 120%)

= (36,000 x 110%) - (12,000 x 120%)

= 39,600 - 14,400

= $ 25,200

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Answer 2

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Add Answer to: You have been provided with the following information: Total Sales $ 90,000 Less variable expenses 54,000...

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You have been provided with the following information: Total Sales $ 90,000 Less variable expenses 54,000...