Schister Systems uses the following data in its Cost-Volume-Profit analyses: Total Sales $ 400,000 Variable expenses 280,000 Contribution margin 120,000 Fixed expenses 100,000 Net operating income $ 20,000 What is total contribution margin if sales volume increases by 20%

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Business

Junior Mckinney

12 August, 11:32

Schister Systems uses the following data in its Cost-Volume-Profit analyses: Total Sales $ 400,000 Variable expenses 280,000 Contribution margin 120,000 Fixed expenses 100,000 Net operating income $ 20,000 What is total contribution margin if sales volume increases by 20%

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Amelie Roberson · Answer 1

Contribution margin = 144,000

Explanation:

Giving the following information:

Total Sales $ 400,000

Variable expenses 280,000

Contribution margin 120,000

To calculate the new contribution margin, we need to increase sales and variable cost by 20%

Total sales = 400,000*1.20 = 480,000

Variable expense = 280,000*1.2 = (336,000)

Contribution margin = 144,000