Question

# Ripa Company has the following data: Sales revenue \$360,000 Variable costs \$240,000 Contribution margin \$120,000 Fixed...

Ripa Company has the following data:

 Sales revenue \$360,000 Variable costs \$240,000 Contribution margin \$120,000 Fixed costs \$100,000 Operating income \$ 20,000

What will the contribution margin ratio be at Ripa Company if sales volume increases by 15%?

Contribution margin ratio = \$ 138,000/ \$ 414,000 = 33.33%

Working:

 Calculation Sales revenue \$                 414,000 360000+(360000*15%) Less: variable cost \$                 276,000 240000+(240000*15%) Contribution margin \$                 138,000 Less: Fixed cost \$                 100,000 Operating income \$                   38,000

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