If the company wants to increase its total contribution margin by 40% in the next year,all other factors remaining the same,it will need to increase its sales by:

Question

Quizplus · Accepted Answer

To increase the total contribution margin by 40%, sales must increase by the same percentage if all other factors remain constant. Therefore, the sales increase needed is 40% of the current sales. If the current sales are $240,000 (assuming a contribution margin ratio of 40%), then 40% of $240,000 is $96,000.

If the Company Wants to Increase Its Total Contribution Margin