Alford,Brooks,and Fitch Companies Below are income statements that apply to three companies: Alford,Brooks,and Fitch:
$\begin{array}{lccc}
&\text { AlfordCo.}&\text {BrooksCo.}&\text {FitchCo }\\hline
\text { Sales } & \$ 100 & \$ 100 & \$ 100 \
\text { Variable costs } & (\underline{10}) & (\underline{20}) & (\underline{30}) \
\text { Contribution margin } & \$ 90 & \$ 80 & \$ 70 \
\text { Fixed costs } & (\underline{30}) & (\underline{20}) & (\underline{10}) \
\text{Profit before taxes:}&\$ 60 &\$ 60 &\$ 60
\end{array}$ Refer to Alford,Brooks,and Fitch Companies.Within the relevant range,if sales go up by $1 for each firm,which firm will experience the greatest increase in profit?

Question

Alford,Brooks,and Fitch Companies Below are income statements that apply to three companies: Alford,Brooks,and Fitch:
$\begin{array}{lccc}
&\text { AlfordCo.}&\text {BrooksCo.}&\text {FitchCo }\\hline
\text { Sales } & \$ 100 & \$ 100 & \$ 100 \
\text { Variable costs } & (\underline{10}) & (\underline{20}) & (\underline{30}) \
\text { Contribution margin } & \$ 90 & \$ 80 & \$ 70 \
\text { Fixed costs } & (\underline{30}) & (\underline{20}) & (\underline{10}) \
\text{Profit before taxes:}&\$ 60 &\$ 60 &\$ 60 
\end{array}$ Refer to Alford,Brooks,and Fitch Companies.Within the relevant range,if sales go up by $1 for each firm,which firm will experience the greatest increase in profit?

Quizplus · Accepted Answer

Alford Company will experience the greatest increase in profit because it has the highest contribution margin per unit of sales ($90), meaning more of each additional dollar in sales contributes to profit after covering variable costs.

Alford,Brooks,and Fitch Companies Below Are Income Statements That Apply to Three