As a result of cost increases imposed by its primary supplier, Fly Fishing Fanatics Supplies Inc. has experienced an increase in its variable direct per unit costs that will result in a contribution margin ratio that is 3 percentage points lower than previous levels. Operating income last month, before the cost increase, was $5,500 based on sales revenues of $50,000 and fixed costs of $20,000. If sales revenues increase next month by 5%, and the new variable costs come into effect, what can Fly Fishing Fanatics anticipate in terms of operating profit?

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The Answer of As a result of cost increases imposed by its primary supplier, Fly Fishing Fanatics Supplies Inc. has experienced an increase in its variable direct per unit costs that will result in a contribution margin ratio that is 3 percentage points lower than previous levels. Operating income last month, before the cost increase, was $5,500 based on sales revenues of $50,000 and fixed costs of $20,000. If sales revenues increase next month by 5%, and the new variable costs come into effect, what can Fly Fishing Fanatics anticipate in terms of operating profit?

As a Result of Cost Increases Imposed by Its Primary