Herman's income statement is as follows:
If sales increase by $10,000, profits will:

Name: Herman's income statement is as follows: If sales increase by $10,000, profits will:
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Question

Herman's income statement is as follows:
 If sales increase by $10,000, profits will:

Quizplus · Accepted Answer

Contribution margin will increase by $4,000, which is equal to $10,000 of increased sales times the 40% contribution margin percentage (calculated as contribution margin of $16,000 divided by $40,000 of sales). Since fixed costs will remain unchanged, net income also increases by $4,000.

Herman's Income Statement Is as Follows