Homework Answers
| 1. | Contribution margin ratio | 15 | % |
| 2. | Estimated change in net operating income | $ 225 |
Variable expense ratio = $ 250,750 / $ 295,000 * 100 = 85 %
Contribution margin ratio = 100 % - 85 % = 15 %.
Estimated change in net operating income if total sales increases by $ 1,500 = $ 1,500 x 15 % = $ 225.
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