The Black Corporation and the Blue Company both have a contribution margin ratio of 35%; therefore a $100,000 increase in sales will result in an equal increase in operating income for both companies.

Question

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If both companies have the same contribution margin ratio, a $100,000 increase in sales will result in the same increase in operating income for both, as the contribution margin ratio directly affects how much of the sales increase contributes to operating income.

The Black Corporation and the Blue Company Both Have a Contribution