Austin,Brown,and Freeman Companies Below are income statements that apply to three companies: Austin,Brown,and Freeman:

Austin Co. Brown Co. Freeman Co.

Sales $100 $100 $100

Variable costs (10) (20) (30)

Contribution margin $ 90 $ 80 $ 70

Fixed costs (30) (20) (10)

Profit before taxes $ 60 $ 60 $ 60

Refer to Austin,Brown,and Freeman Companies.Within the relevant range,if sales go up by $1 for each firm,which firm will experience the greatest increase in profit?

Question

Austin,Brown,and Freeman Companies Below are income statements that apply to three companies: Austin,Brown,and Freeman:

	Austin Co.	Brown Co.	Freeman Co.
Sales	$100	$100	$100
Variable costs	(10)	(20)	(30)
Contribution margin	$ 90	$ 80	$ 70
Fixed costs	(30)	(20)	(10)
Profit before taxes	$ 60	$ 60	$ 60

Refer to Austin,Brown,and Freeman 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

Austin Company has the highest contribution margin per dollar of sales, so it will experience the greatest increase in profit with an increase in sales.

Austin,Brown,and Freeman Companies Below Are Income Statements That Apply to Three Companies: Austin,Brown,and