Question

If a company's contribution margin ratio is 20%,

		variable expenses are 80% of sales.
		with a 20% increase in sales, net income will go up by 20%.
		total expenses are 80% of sales.
		contribution margin is 80% of sales.
		net income is 20% of sales.

Answer 1

If a company's contribution margin ratio is 20%, variable expenses are 80% of sales. True

With a 20% increase in sales, net income will go up by 20%. False, this will only be true if fixes cost is nil.

total expenses are 80% of sales.

contribution margin is 80% of sales.

net income is 20% of sales. False

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