A firm has revenues of $150,000, a contribution margin ratio of 35%, and fixed expenses that total $60,000.If revenues increase by $30,000, then:

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The contribution margin ratio is 35%, so an increase in revenue of $30,000 will increase the contribution margin by 35% of $30,000, which is $10,500. This increase in contribution margin directly increases operating income by $10,500, as fixed expenses remain unchanged.

A Firm Has Revenues of $150,000, a Contribution Margin Ratio