Breeze Company has a contribution margin of $4,000 and fixed costs of $1,000. If the total contribution margin increases by $1,000, operating profit would:
A) Decrease by $1,000.
B) Increase by more than $1,000.
C) Increase by $1,000.
D) Remain unchanged.

Question

Quizplus · Accepted Answer

Breeze's operating profit would increase by $1,000. Operating profit equals contribution minus fixed costs. If contribution increases while fixed costs remain the same, operating profit will increase by the same amount.

Breeze Company Has a Contribution Margin of $4,000 and Fixed