Preston Company sells a product whose contribution margin ratio is 20%.Assuming fixed costs don't change,incremental sales of $50,000 will generate $20,000 of additional profit.

Name: Preston Company sells a product whose contribution margin ratio is 20%.Assuming fixed costs don't change,incremental sales of $50,000 will generate $20,000 of additional profit.
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Question

Quizplus · Accepted Answer

With a contribution margin ratio of 20%, incremental sales of $50,000 would generate additional profit of $10,000 (20% of $50,000), not $20,000.

Preston Company Sells a Product Whose Contribution Margin Ratio Is